Briefly and concisely summarizing the advantages and disadvantages of using a company car.
A company car is a vehicle used in our business, for which we account for all expenses, and we reclaim the VAT included in the car and its costs. For sole proprietors, the car remains in their name, while for BVs or VOFs, the car is registered in the company’s name. If the owner uses the car strictly for business purposes and drives it less than 500 km per year for private purposes, no bijtelling needs to be paid for the car.
What is bijtelling?
Bijtelling is an extra personal income tax paid annually for private use of the car. To prove that the car is not driven for private purposes, one must keep a strict km record (rittenregistratie) or install one of the tracking systems approved by the tax authority in the car. If the tax authority catches someone cheating with the km record, the fine can go up to €20,000.
If the entrepreneur decides to use the company car for private purposes, bijtelling must be declared to the tax authority in the annual return for sole proprietors or VOF owners. For BVs or foundations, this is accounted for in the monthly payroll.
The amount of bijtelling The amount of bijtelling depends on the type of car (CO2 emissions) and its manufacturing date. If the car has 0% CO2 emissions, 12% of the car’s original value (original value = catalog value, found on the RDW website for most cars) must be declared at the end of the year in the personal income tax return. If the car’s CO2 emissions are above 0, 22% of the car’s original value must be taxed at the end of the year. This applies to cars aged between 0 and 14 years. For cars older than 15 years, the tax authority bases the calculation on the market value, 35% of which is taxed. Bijtelling is calculated based on the aforementioned percentages, capped at the total annual car costs.
Example: If a car is 3 years old, had an original value of €45,000, 22% of that is €9,900. If the annual cost of the car was €7,500, then €7,500 is entered in the tax return.
Deductible car costs:
• Amortization of the car’s value (over 5 years)
• Fueling domestically and abroad
• Car repairs
• Road tax
• Insurance
• Possibly tunnel fees or foreign highway sticker fees
• If the car is leased, the interest included in the leasing amount
Opinion In my opinion, what is financially most favorable for an entrepreneur, but of course, this is up to everyone to decide, is to use the company car strictly for business purposes or to buy a car older than 15 years.