Is business driving more advantageous for a self-employed person?
Unless you need a van for your work, as a self-employed person starting out, you usually use your private car for business trips. You can then claim €0.19 per business mile as business expenses. Usually this arrangement is fine during the start-up phase of your business. But as your business grows, or when you need a new car or van, you will have to decide whether business driving might be more interesting for you. Take your insurance into account as well.
Additional charge for business driving
If you put a car in your company's name, you can deduct all the costs of that car, including depreciation, fuel, car wash receipts, and maintenance. However, you should keep in mind that there is an additional taxable benefit for the private use of your car, unless you drive less than 500 kilometers per year privately. This addition is a percentage (depending on CO2 emissions 4% or 22%) of the list value of the car. The amount of the addition is added to your income as a self-employed person. So you pay income tax on it. If you drive a car that is 15 years or older, you can make use of the Youngtimer scheme. You then only pay an additional taxable benefit over the current value of the car. That makes a difference!
Lower premium for commercial vehicle insurance
An additional advantage of a company car is that its insurance is also cheaper. Because the company car may be insured excluding VAT. This reduces the amount to be insured and therefore your premium! For a grey license plate car, it is mandatory to take out company car insurance. It does not matter whether the car is registered in your company's name or not. At online insurance specialist Cheapp.nl you can take out all types of company car insurance very cheaply:
- Business car insurance: for business passenger transportation
- Van insurance: for goods transport
- Truck insurance: from 3500 kilograms weight and payload
- Fleet insurance: from 10 commercial vehicles
All of these insurance policies can also be purchased with leased vehicles.
Deduct VAT on private car
If the car you use for business is private property, you cannot deduct VAT when you buy it. You may deduct the VAT on maintenance, repair and running costs, but obviously only for business use. Keep good mileage records for this. The amount you can claim back is the ratio between the number of business kilometers and the number of kilometers driven on an annual basis.
Which is more advantageous; business or private driving?
Every self-employed person is different, so what is more advantageous depends very much on your situation. You can ask yourself three questions that will determine what may be the best choice for you:
- Do you need a passenger car or a van for work?
- How many miles do you drive business and personal?
- Is the total cost of car higher or lower than the addition?
Discuss these questions with your accountant to find out what is most advantageous for you: business car or no business car?
Adjust your insurance
If you are switching from a private car to a company car, don't forget to adjust your insurance. Alpina.nl insures both business and private vehicles and always helps you make the switch. You quickly calculate online what premium you will pay. Alpina.nl compares all Dutch insurance companies. Moreover, you can choose additional coverages. Want to know more about business vehicle insurance? Or would you like to know which other business insurances are applicable for your company?
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