Many entrepreneurs running a business in the Netherlands use a car in their daily work. Already at the tax accounting stage, however, the question arises: how to include the car in the company so that it complies with the regulations and is at the same time tax-beneficial.
Dutch tax law provides several solutions. The choice depends on how often the car is used in business and whether it also serves private purposes.
Car as a business asset
A car can be assigned to business activity if it is used mainly for business purposes. In such a situation, the entrepreneur can include all expenses related to its use in business costs.
Tax costs include, among others:
- purchase of the car or leasing instalments,
- fuel and charging, in the case of electric cars,
- inspections, repairs and maintenance,
- insurance and road tax,
- other operating costs.
In the case of a company car, the issue of VAT also arises. With business-only use, full VAT deduction is possible, while with mixed use appropriate corrections are applied.
Private use of a company car and bijtelling
If the company car is also used privately, the Belastingdienst (Dutch Tax Administration) adds the so-called bijtelling (private use addition for company car). It is an additional amount treated as income, on which tax is calculated.
Bijtelling:
- depends on the catalogue value of the vehicle,
- is calculated as a percentage,
- applies if private use exceeds 500 km per year.
To avoid bijtelling, it is necessary to keep an accurate trip log confirming business-only use of the car.
Private car used for business activity
The second solution is to use a private car which is not entered into the company. In this case, costs are settled through a so-called per-kilometre allowance.
The entrepreneur can include in costs:
- €0.23 for each kilometre driven for business.
This rate covers all expenses related to the use of the vehicle, such as fuel, insurance or service. The condition is keeping a trip log containing, among others, the date, route and purpose of the trip.
How to choose the best solution?
There is no single universal car accounting model. Each case must be assessed individually, taking into account:
- the number of kilometres driven for business,
- the value of the vehicle,
- the scope of private use,
- the form of business and the level of income.
The tax differences between the various options can be significant, so it is worth analysing them carefully before making a decision.
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With a car in the business, everything is decided by the details: how it is used, mileage, VAT and the form of the company. Together it is easier to choose the right accounting model.