Car tax in the Netherlands is high. There is import duty on the car. If you drive a company car, a percentage of the Dutch catalogue value is added to your taxable employment income.
Company car and car tax
If you have been issued with a company car, the advantage of this car is regarded a taxable remuneration in kind. The value of this remuneration depends on the car. If the car has no emission the value is set at 4% of the Dutch catalogue value. When the car has nearly no emission the car tax is 15%, then there is a 21% percentage for low emission cars. All other cars have a 25% of the Dutch catalogue value added to their income.
If you can proof you have not driven more than 500 km during a calendar year for private use with the company car, no value is added to your income. However, you need to indicate this to the tax office via a request at the start of the calendar year. At the end of the year you need to be able to substantiate this with a KM overview specified up to the single km driven. The tax office monitors this with the non speeding cameras you see on the road. Also speeding tickets are taken into account.
Company car and skiing holiday
The director shareholder of a BV company had such a 0% amount added to the income request made for the year 2009. In the week of February 20 there is a children’s holiday and he went with his family in the company car to Austria. He dropped of the family at the hotel and drove 60km onwards to a meeting he had with a business relation. In the evening he returned to his family and after a week of skiing the family drove back to the Netherlands.
The tax office challenged the 0% value added to the income due to the trip made with the car for the skiing holiday in Austria. The director countered that challenge with the business meeting, which made the trip a business trip. The court ruled that the main goal of the trip determines whether it was for business or pleasure. The main goal was the skiing holiday, as that was already planned a long time in advance. The business meeting was arranged for at a later stage. The consequence is that the 0% value is not applicable and 25% car tax was added to the income most likely with a 25%-50% penalty on top.
Import duty on car and fake rental agreement
The rule is that you cannot drive a foreign license plated car in the Netherlands if you are a Dutch resident tax payer. Every Dutch resident tax payer needs to pay import duty on a car. Unless the car qualified to be imported under the household rules of immigration. There are two exceptions, but if you qualify for those exceptions you need to carry the certificate of that exception with you in the car while you drive it.
March 2012 a car with a Belgium license plate was stopped by the Dutch police. The Dutch resident tax payer driver claimed to have rented the car in Belgium for a three day period. He forwarded the rental agreement and the proof of payment a couple of days later. The Dutch tax office did not charge him car tax for this event.
In March 2013 in a criminal investigation it came to light that the rental agreement shown a year before was fake. The EUR 61.970 import duty was charged and increased with 50% penalty. The car was shown multiple dates on the Dutch roads, justifying the tax. The penalty could not be argued as the user willingly forged forms to prevent paying the EUR 61.970 import duty on the car.
Import duty reduction and “second hand” car
The rule is that you need to pay tax on import of any car from abroad. The tax is base on emission of the car and the tax is high. If not a brand new car is imported, a reduction of the tax is provided. The reduction is a depreciation system over a 8 year period where at the end 10% always remains.
Between September 2012 and January 2013 a BV company imported 39 cars for the purpose of resale. In each import duty tax return a reduction of the import duty was claimed for the fact that the cars were not brand new. The tax office challenged the import duty returns and charged EUR 6.111 additional import duty.
The reason for the challenge is that all cars had driven at the time of import not more than 39 km. Some of them had not even driven 10 km at that time. Besides the low km driven, some were imported within 2 weeks of the first registration of the car abroad. None of the cars had any usage damage or damage all.
The court ruled that the guidelines state that if a car was registered abroad, a reduction in import duty can be claimed. Even if the car is as new as it looks like. The tax office lost this case.
The company car is one of the most advised products. The outcome of those reports is nearly always the same. Both sides, purchase private car or use a company car, have non comparable pros and cons. In the end the simple answer is that you should not drive a car you cannot afford. At the same time the car industry is teasing you with beautiful models. Hence the question keeps on coming back about what to do with a car.