The company car is by far the most advised aspect of a company. One way or the other, a car costs money.
The company car
A company car is a benefit the employer makes available for the employee. The car is used for work, but is also used for private purposes. As that is a remuneration in kind, a percentage of the new Dutch catalogue value is added to the income of the employee.
The company Porsche without a remuneration in kind
Is that possible? Is that not too beautiful to be true? The too beautiful to be true phrase should become a mantra in Dutch taxation, as that solves many questions we receive.
This time a shareholder director of a BV company awarded himself with a Porsche Panamera leased by the BV. His wife, who did some work on the side for the BV, was driving a Mini Cooper leased by the BV.
The couple did not add the compulsory percentage to the income for private use. They paid the costs of the company cars themselves to the company. The couple did not see the cars as company car.
The tax office had a different vision.
The company car – court case
The Dutch tax office imposed the applicable percentage to the income plus 40% penalty for misbehavior. The couple appealed based on the fact they fully paid for the costs. The BV did not bear any costs.
The tax office was not shown a document from which it was made clear the payments the couple made was voluntary or compulsory. In other words, the payments could have been for the cars. Could have been for something else. The BV had no legal means to claim payments from them related to the company car.
That made the payments irrelevant for the procedure.
The court ruled that the tax office was correct in its assessment and penalty.
The company car – what is best
A note about the most asked question. If you compare a company car versus purchasing a car privately, compare apples with apples. Not put in a lemon in the comparison. That implies you need to go through the full procedure with the company car from the purchase to and including the sale to yourself at the end of the period the company car is used for the company.
Then you learn that the difference is marginal, the obligations that come with the company car procedures are very much open to debate about values.
If you want a car for yourself, purchase one yourself. If the company needs transport, purchase company transport.
Do not try to see what is best for your wallet, not even tax wise, the best. Neither is, and that is coming from a petrol head!
Tax is exciting
Tax is exciting. Driving a Porsche paid by the company is maybe even more exciting. Myself I prefer the Mercedes make, hence the picture.
We do disagree with the couple. If the couple states the cars did not cost the company any burden, why not lease the cars privately directly? Indeed, on personal title the couple probably did not have enough loan capacity to obtain the lease contracts. The BV did apparently have the loan capacity. The BV did bring them an advantage.
Anything gained in this employee relation is subject to tax. Anything gained in the shareholder relation is subject to dividend withholding tax.