If you drive a company car, a percentage of the new Dutch catalogue value is added to your income, as a remuneration in kind for the fact you can use the car also for private purpose. The amount is added to your income regardless if you are a blue color or white color worker. Apparently that is not what everybody is expecting…
BMW 760Li with chauffeur
A real estate developer had at his disposal in the years 2006 and 2007 a EUR 192.937 BMW 760Li. He claimed never to have driven the car, the chauffeur did, hence he had not added 25% of the catalogue value to his income. Being EUR 48.234.
Not sure what the real estate developer meant with his remark he never drove the car. Should then the driver add that value to his income? I think the chauffeur would be in shock, not only does the value exceed his annual salary, if he knew he would have extensively used the car for private purposes I can only imagine.
The developer had not added the value to his income, nor did he comply with the rules of the exception, being a KM administration needs to be kept to proof less than 500 km was driven for private use. He claimed to have many other cars and only the chauffeur is actually driving the limousine.
It took till now (October 2015) for the tax office to make a correction for the years 2006 and 2007 when the car was being used by the company. This late correction can only be due to the fact the real estate developer did not agree with the correction and started a court case. You simply cannot blame the chauffeur.
How is it properly done?
Either the percentage of the new Dutch catalogue value is added to your taxable income. The percentage varies depending on the Co2 emission. Or you keep a very detailed KM administration of the KM driven per calendar year, so you can proof less than 500 km was driven for private use.
What if you change cars?
If you have chosen to proof less than 500 km is driven for private use and you change cars during the year, the 500km minimum stands for the full year. That implies one KM administration including the two companies cars, in which not more than 500 km is being driven for private use. The penalty for not being able to proof the 500km is that the applicable percentages over the catalogue value of the cars are added to your income pro rate.
Company car and 30% ruling?
If you have the 30% ruling and you have a company car, then the remuneration in kind is part of the gross salary. The gross salary is for 70% a taxable salary and for 30% a reimbursement of costs (in other words: tax free). The 30% ruling has also a positive effect on the use of a company car.
Company car and VAT
The costs of the company car carry Value Added Tax (VAT) that the company can reclaim. However, the car has partly been used for private purposes. For this use a correction is made in the income tax, but also in the VAT. In the VAT the correction for private use of the car is 2,7% over the catalogue value.