Driving a car in the Netherlands is expensive – car tax

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.

car tax

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.

Orange Tax Services

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.

 

How not to cheat the road tax?

Having a car in the Netherlands is expensive. Not only did you pay taxation on the import, you pay quarterly taxation on using the road. Gasoline is around 70% taxation, the other part are the genuine costs of petrol.

The road tax depends on the type of petrol you use and the type of engine in the car. The lesser CO2 is in the emission rates of the car, the lower is the road tax. If you use diesel or gas in the car, the road tax is substantially higher than if you use petrol. In the end it is a mathematical decision where you end up. In other words, if you have a high mileage per year, diesel could be the better choice as the lower costs at the gas station makes good the higher road tax amount.

toll and tax

Deregister car for road tax

If you have an old timer that is expensive for road tax, or you do not use the car for any reason, you could report that to the tax office and claim that the car is not on the public road. Then you do not need to pay the road tax for that period.

How not to cheat on deregistration for road tax?

A car trade company had in its stock of trade cars a van. All of trade cars are deregistered from road tax. Never the less the tax office registered on August 7, 2013 that the van in name of this car trade company was driving on the road. As no road tax was paid, the tax office assumes that the car should have received a road tax invoice for all months it was so called deregistered plus a penalty. In this case EUR 418 road tax assessment plus 100% penalty.

The car trade company made a complaint against this assessment as they have on register that the van was purchased with 220.000 km on the clock and when the van was sold on September 4, 2013 the clock showed again 220.000 km. Even though the court accepted this proof, maybe also in line with the low amount of tax being the issue, the high court disagreed. The high court could not believe any person would purchase a second hand car without making a test drive even once.

Maybe the fact that exactly this van was fined for speeding during the period this car trade company had the car on stock, and this speeding ticket was paid without any complaints, made the case the car was used on the road.

If you cheat, do not speed.

Tax office and auditing

The Dutch tax office is an organization where the majority of the employees are at an age that they will retire within about 3 to 4 years. Then on top of that the staff is to expensive, so persons will be dismissed. In order to be able to do the checking on simple aspects like road tax, camera’s are being used. You might have noticed a ‘Belastingdienst’ car on the road with a camera sometimes accompanied by two motorcycle assistance. Even thought you reduced your speed to prevent a speeding ticket, they were not there for speed, but for matters like road tax and outstanding tax assessments. So please pay and pay in time.

Orange Tax Services

We do not provide services in the field of road tax, you have to pay the road tax or sell the car. However, we are in the field of determining your fiscal residence. Should your fiscal residence be in the Netherlands and you drive a car with foreign license plates, you have a problem. The problem is that you should have converted those to Dutch plates, or have left the car in the country where you came from.

If your car is stopped, then the person driving the car regardless who that is, is to pay the tax on the car. We have jurisprudence on Belgium license plated car, driven by a Dutch tax resident who was a friend of the owner, the owner was also in the car when stopped, but the Dutch tax resident was due the tax on the car, even though the car was never imported, as the friend drove home to his house in Belgium with his car. In this case it as was a Porsche 911, so the amount of tax was substantial as well. This rigid this legislation is.

Would you like to learn more about your place of fiscal residence, do not hesitate to contact us.

How not to import a car free of BPM

In the Netherlands we have taxation on cars. The name for this tax is BPM and the reason why we pay this tax can be various. Environmental or simply cash for the Government. The system has changed over the years from a simple 45,2% tax on the Dutch import value. So many wreaks were imported with zero value, hence zero BPM, and then those wreaks were ‘unwreaked’ in Eastern Europe, filled with all kinds of luxury accessories and sold for a good price. I know, as I bought one. A wreak remains a wreak with our without accessories.

The system of BPM changed to a CO2 emission taxation. It goes without saying that zero emission cars pay no BPM and dirty cars pay the max. It goes without saying as well that the Dutch imported in high volumes zero emission cars, which resulted in low BPM income for the Government, with the result that zero emission cars pay now BPM as well. From an environmental point of view not a firm policy. It is again a matter of green in the pockets instead of green in the air.

BPM on import cars

Importing a car BPM free

If you are an immigrant into the Netherlands, and you have owned a vehicle in your name for at least 6 months abroad, then you can request with the Dutch customs to import the car within the house hold goods free from BPM.

We have experienced that person terminated their job abroad and took over the company car because it was a nice car, then they moved to the Netherlands and had to pay BPM over the car, even though they have driven the car for a long time, it was owned by them less than six months.

How not to import a car free of BPM

A Dutch resident tax payer took on a job in Germany in 2012 and migrated to Germany. In May 2012 he purchased an Audi S5 from 2009. The employment was terminated April 2013 and this person returned to the Netherlands.

At the border he claimed that the car should be imported BPM free, as he owned the car for more than six months and he claimed to import it in the household goods.

The customs rejected his request. The cause of the rejections was multiple. This Dutch person might have claimed to have moved to Germany, but in fact he had not registered himself in Germany, neither did he pay Germany tax and social premiums over his German income, he was still insured for health care in the Netherland, had a Dutch doctor and dentist. Moreover, he remained registered with city hall in the Netherlands.

All points for the Dutch tax office to determine this person never moved his central point of life from the Netherlands to Germany. Which implies you cannot move it back, thus cannot claim to import the car free of BPM.

GB import?

I do not want to state the obvious, but importing a car from Great Britain, Australia or Japan is also not recommended. No tax related reason, but having a Dutch license plated car with the steering wheel on the side we consider being wrong, will result great difficulty when you would like to sell this car.

Orange Tax Services

We do not assist with the import of cars and BPM tax filings, for that you have specialists. What we do, basically every day, is determining where you  or your company has its residence. You might have the opinion not to be a Dutch tax resident, but if the facts and circumstances proof otherwise, you need to act on that. Here we an assist you.

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