Company Car Tax Imputation: How Does It Work?
Do you drive a company car? If so, you may be wondering about the additional tax liability. The use of a company car can be divided into business use and personal use. If you use the car strictly for business purposes, you do not have to pay additional tax. If you drive more than 500 kilometers per year for personal use with your company car, you will have to pay additional tax. Additional tax is a percentage of the list price (selling price). At Alpina.nl, we’ll tell you everything you need to know about additional tax on company cars.
Company Car Taxable Income for 2021
In 2021, there are two tax rates for the imputed income: 12% and 22%. The amount of imputed income you pay depends on your car’s CO2 emissions. These emission limits are set anew each year. In 2017, the additional tax rate was reduced from 25% to 22%. However, if your car was first registered before 2017, the 25% additional tax rate will continue to apply to your car.
The table below lists the additional tax rate for 2021. This table applies to cars first registered in 2021. In 2021, only cars with zero CO2 emissions fall into the 12% additional tax liability category. The reduced rate applies to hydrogen-powered cars. For zero-emission cars that are not hydrogen-powered, the 12% additional tax liability applies only up to a list price of €40,000.
| Category | CO2 emissions in grams per kilometer |
|---|---|
| 12% additional tax liability | 0 |
| 22% taxable income | more than 0 |
How can I calculate the imputed income for my company car?
Let's assume a tax-addition percentage of 22%. To calculate the gross tax addition for your company car, you can use the following formula:
Original list price + VAT + BPM × 0.22.
Please note that this is the gross taxable value of your company car. The net amount you pay in taxable value depends on your income. In some cases, a lower taxable value applies. The date the company car was first put into service is always taken into account, as the taxable value rates are valid for 5 years.
Frequently Asked Questions About the Taxable Benefit for a Company Car
My company car is more than 15 years old. How much will I have to pay in imputed income tax?
Is your company car more than 15 years old? If so, a 35% additional tax liability applies based on the current market value, not the list price.
I drive less than 500 kilometers a year for personal use in my company car. Does that mean I don't have to pay the additional tax?
If you have a company car that you use exclusively for business, you’re allowed to drive 500 kilometers per year for personal use. That way, you can still make a quick trip to the supermarket. However, it’s important to keep track of all the kilometers you drive for personal use in your records. You’ll need to report these kilometers to the tax authorities. If you exceed the 500-kilometer limit, you risk a fine if you don’t report it to the tax authorities.
I run a sole proprietorship. How does the additional tax liability work for a company car?
If your company covers the costs of a car, it is considered a company car. Do you also use the car for personal trips? If so, you must pay a tax adjustment. This is considered part of your salary, and therefore you must pay tax on the benefit you receive from being able to use the car for personal purposes.
Can I pay off the additional tax liability for a company car?
With some company vehicles, such as delivery vans, it is common for them to be used alternately by different employees. To prevent each employee from having to pay the additional tax individually, the employer can also pay a lump-sum tax on the vehicle. This means that the employer pays a €300 final tax per delivery van per year. This applies to a delivery van that, due to the nature of the work, is continuously used on a rotating basis by two or more employees, making it difficult to determine whether—and to whom—the company vehicle has been made available for personal use. In such cases, the employees are not required to pay the additional tax liability, and no mileage records need to be kept.
What about the taxable benefit if my company car has a gray license plate?
A car with a gray license plate has many advantages. For example, you receive a discount on the motor vehicle tax, and you do not owe any BPM when purchasing the car. This results in significant tax savings. Do you have a car with a gray license plate as a company car? If so, you’re probably wondering how the additional tax liability works. For a company car with a gray license plate, the same rules apply as for a regular company car when it comes to the additional tax liability. The additional tax liability is determined based on emissions.
As with a regular company car, the additional tax liability is calculated based on the list price. If the car with a gray license plate was registered before July 1, 2005, the additional tax liability is calculated based on the purchase price, including VAT but excluding BPM. If the car is more than 15 years old, the additional tax liability is 35% of the current market value, not the list price.
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