Company car

Your company car and income tax

Do you want to determine whether your car is a company car or a private car for income tax purposes? First, calculate how much you drive for business and how much for private use. It is up to you how you calculate these business and private kilometres.

Do you drive your car for business purposes more than 90% of the time? Then for income tax purposes, you have a company car. The same applies the other way around. Do you drive your car for private use more than 90% of the time? Then your car is part of your private assets.

You also have a company car if:

• you drive more business kilometres than private kilometres, and
• you do not drive more than 500 kilometres per year for private use

In other cases, you decide if your car is part of your business assets or private assets for income tax purposes.

You can also use a private car for business purposes. But different income tax rules then apply.

Private use addition for private use of a company car

Do you use your company car privately for more than 500 kilometres per year? Then you must pay a private use addition (bijtelling, in Dutch). The amount of the addition depends on the value of your car and its CO2 emissions.

The Netherlands Tax Administration automatically calculates the taxable addition in your income tax return. This is a percentage of the list price of your car. That percentage depends on the date of registration of your car. You can look up the list price of your car via the RDW registration number check (in Dutch).

No private use addition

You do not have to pay any private use addition if you do not drive your company car privately for more than 500 kilometres per year. It is up to you how you show this to the Tax Administration. For example, with a trip registration system. RitRegistratieSystemen (in Dutch) is an example of this type of system.

You can use a simplified trip registration for company vans. This makes it easier for employees to keep track of when the van was used for business and for private purposes.

Addition for the private use of an electric car

Do you drive a fully electric, hydrogen, or solar car? Cars with no CO2 emissions currently have a lower private use addition. Read more about the financial benefits of electric company cars.

Put the value of your company car on your business balance sheet

Do you choose to use your car for business purposes? Then put the purchase value on your company’s balance sheet. You can then deduct the car costs incurred and the annual amortisation, or depreciation in its value every year. The amount that appears annually on the balance sheet is called the book value. Make sure the car is registered in your company’s name. And remember that different rules apply if you use your private car for business purposes.

Deduct your car expenses from your profit

You can deduct all car expenses from your business profit. For example:

• maintenance
• the periodic motor vehicle test (APK)
• parking costs
• motor vehicle tax

Company car and VAT

For VAT purposes, you may choose whether your car is business or private. Even if you declare your vehicle as a company car for income tax purposes, you can keep your car private for VAT purposes (in Dutch). For example, do you choose to count the car as a private asset for VAT? If so, this does not automatically mean that the car also belongs to private assets for income tax purposes. Make sure your choice is clearly stated in your records.

For a company car, you can deduct VAT on the purchase, maintenance, and use (as input tax). Please note, this is only possible for the kilometres you have driven for turnover subject to VAT (in Dutch).

Correct your VAT return if you use your car privately

Do you also use your business car privately? Then you do pay VAT on the private kilometres in the VAT return at the end of the year (in Dutch). Keep in mind that commuting is regarded as private travel for VAT purposes. You report the VAT you have to pay for the private kilometres in the final VAT return of the financial year, in the privégebruik (private use) section.

There are 3 ways you can calculate how much your private use was:

1. You can choose to keep good records of your trips in a complete trip registration. Then you will know exactly how many kilometres you drove privately.
2. Are you not keeping a complete trip registration? You can also show the business and private kilometres with other information from your records (in Dutch).
3. Do you not keep a record of private car trips? Then you can calculate the VAT you have to pay for your private use using a standard percentage of your car's list price.

To make these calculations easier, use the VAT and the car calculator (in Dutch).

Are you transferring your private car to the company? Then you are a customer and seller at the same time. As a result, you cannot deduct this purchase.

Leasing a company car

Do you want to lease a car for your business? Then you can consider these lease forms:

Operational lease

You lease a car and pay a fixed amount per month for using the car. The leasing company remains the owner. The car is not part of your business assets, so you do not put the value of the car on your balance sheet.

Financial lease

This is a form of credit with which you buy a car in your company’s name. You pay off the loan in instalments. Unlike with an operational lease, with a financial lease, you can put the car on your balance sheet. In most cases, this entitles you to consider depreciation and interest deduction.