If you have a company and you drive a company car, a value of the car is added to your income. The reasoning is that you have an advantage by using the car and having the company pay for the costs. That advantage can be between 7% and 21% over the Dutch catalogue value including VAT and BPM. BPM stands for the import tax.
How to avoid the car being taxed?
In our line of business you have a limited number of questions that keep on returning, among one of them the company car. Basically the question is always the same: how can I drive the nicest car at the lowest costs?
There are three possibilities:
- Not drive a company car.
- Drive a company car, use it for less than 500 km per full year for private use and keep a detailed mileage administration to proof the private use was under 500 km
- Add the percentage of the private use to your income and deduct the costs.
The percentage added to your income depends on how environment friendly the car is. At the time of registration this is determined and then a sticker with a percentage is put on the car. In my opinion the most fun cars you pay the high percentage for.
The number 2) possibility is the possibility common sense could make, but experience has learned that while actually driving the car, the mileage administration is soon seen as a burden to be updated during the weekend. Then it is forgotten in the weekend and updated many weeks later. The Dutch tax office has placed cameras on the Dutch national roads and can easily challenge your administration. In our opinion number 2) is the non workable solution.
How many company cars can you drive?
In this case a BMW, Audi S5 and Audi S4. You never know what you feel like driving in the morning. This person had added to his income only 25% (old percentage) of the new Dutch catalogue value for the BMW to his income and kept a mileage administration for the Audi’s.
You might understand that the Dutch tax office was keen to see the administration of this company and did an audit in 2011. It turned out that the mileage administration of the Audi’s was more a good guestimate than an actual administration, hence dismissed, and 25% of the catalogue value of each Audi was added to the income as well, plus a 10% penalty, being EUR 30.103 in wage tax to be paid.
The person in this matter made a complaint with the court. The court determined that the gas to kilometre driven varied from 1:1 to 1:22, not in line with the KM administration, neither did the gas receipts have the correct KM registration on them. The wage tax assessment remained.
Orange Tax Services
We very much can understand a person driving the cars mentioned, but maybe it would have been better to keep your hobby private and a cheap taxed business car corporate.