Can I drive a company car privately?
Did you know that there are about 850,000 company cars in the Netherlands? Do you also drive a company car? Then its use can be divided into business and private use. If you also drive a company car privately, this has consequences for the tax you have to pay. If you only drive the car for business purposes, you have 500 kilometers per year that you can drive privately. The tax authorities see this driving as a form of income. You can read how this works and further explanation on this topic in this article.
Can I drive a company car privately?
Above has already been briefly explained about driving a company car privately. Here is a little more detail on it. If you have a company car that you drive only for business, then you have 500 kilometers per year that you can still drive privately. Then you can still make a quick trip to the supermarket. However, it is important to keep all private kilometers in your administration. You have to report these kilometers to the tax authorities. Do you drive more than 500 kilometers? Then you risk a fine if you do not report it to the tax authorities.
You can also lease a company car with an additional taxable benefit. This means that you can drive the car for both business and private use. Additional tax is a percentage of the list price (selling price). The percentage depends on many things. Such as:
- Day of commissioning;
- How old the car is;
- How economical the car is;
- And when the license plate was issued.
What is the cost of driving a company car?
Do you drive the car purely for business and make no private mileage? Then this is not considered wages by the Tax Office. You do not have to pay anything or declare anything to the tax authorities as additional wages. Do you also drive the car privately and do not exceed 500 kilometers per year? Then you do not have to declare anything. However, it is very important to keep an accurate record of your private mileage. Do you exceed 500 kilometers? Then you risk a fine or you will still have to pay the additional tax on the car.
The cost of driving a company car that you also use privately depends on the percentage of additional tax to be paid. These percentages vary greatly. There are two different percentages in 2019. 4% and 22%. The 4% additional tax rate is for vehicles that have no CO2 emissions(electric or hydrogen). Cars that are not hydrogen-powered and have a list price over €50,000 fall under the other addition rate. The 22% addition rate applies to all vehicles that have CO2 emissions greater than 0.
Is driving a company car privately, fine?
Don't want to risk a fine? Then you must keep good mileage records and stay under 500 kilometers per year. This applies to the private use of the car. In one year, the tax authorities sent EUR 5.7 million in additional fines to users of company cars where the user claimed to have driven less than 500 kilometers, but in reality it was more.
A 2010 calculation example that shows what kind of after-tax penalty the IRS can impose:
An employee earns €3,000 per month and has a car with the list price of €30,000. Employee drove more than 500 kilometers privately but did not report it.
Addition: €30,000 x 25% = €7,500.
€7,500 x tax rate 42% = €3,150.
Possible fine of 100% = €3,150.
Total assessment: €6,300.
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