Private use of company car
When you make a company car available to your employee which the employee may also use for private purposes then the Tax and Customs Administration regards the gain obtained from the private use of this car as the employee's wages. You must add this gain to the employee's wages. The additional income for the private use of a car made available to the employee (hereinafter referred to as the addition for the private use of a company car) is a non-monetary component of the wages (wages in kind). You pay all payroll taxes on the addition for the private use of a company car.
The Tax and Customs Administration also understands 'private use' as including the kilometres your employee drives in detours in the commuting route which are made for private reasons. The Tax and Customs Administration deems commuting kilometres to be business kilometres. The commuting kilometres also include the kilometres your employee drives on journeys between home and work during the day, for example the kilometres driven in lunching at home.
Making a car available to your employee
You have also made a car available to your employee in the following situations:
- You have reached an agreement with the employee stipulating that the car shall be used solely for business purposes.
- The car is not your property: you have rented or leased it for your employee.
- You have agreed that you will reimburse the total costs of your employee's car (including the depreciation). You do not make a car available to your employee when you reimburse solely € 0.19 per kilometre driven for business purposes.
- You reimburse all the costs of a car your employee has rented or leased.
You are also deemed to have made a car available to your employee when your employee reimburses you an amount for the private use of a car in the last 3 of the above situations.
Calculating the addition for the private use of a car
You calculate the addition for the private use of a car using the tax basis for the addition for the private use of a car. The addition is, in general, at least 22% of the tax basis for cars with a date of first registration of 1 January 2017 or later and at least 25% for cars with a date of first registration before 1 January 2017. The addition is 35% for cars older than 15 years. You add a proportional part of the addition for private use to the wages of your employee in each wage period.
The tax base is the Dutch catalogue price of the car inclusive of VAT and the private motor vehicle and motorcycle tax (bpm). The tax basis is inclusive of accessories fitted ex works or fitted to the car by the dealer or importer before the date on which the car is assigned a registration number.
From the moment that a car is more than 15 years old, the addition for the private use of a car is based on the car’s fair market value. Auction prices can give an indication of the value. You can also look at the assessed value of the car for insurance purposes or at the actual kilometre and lease prices. The fair market value may be higher than the original new car price.
Did you buy the car outside the Netherlands? If so, you also calculate the tax basis using the Dutch catalogue price. When the car is not available in the Netherlands then you calculate the tax basis using the catalogue price of an equivalent car available in the Netherlands. Call the Tax Information Line if you have any questions about the catalogue price of a car.
The addition percentage depends on factors including the car's CO2 emissions. Information about the addition percentage you are to apply is available in the 'Handboek Loonheffingen', chapter 23 (only available in Dutch).
You deduct any contribution your employee pays from his or her net wages towards the private use of a car from the addition for the private use of a car. As the occasion arises, the employee's contribution towards the private use of a car in a given wage period may be greater than the addition to be included in the wages for that wage period. Although a negative balance is then permitted in a given wage period, the balance for the full addition in an entire calendar year may never be negative. When it transpires that you have offset more than the total employee's contribution at the end of the calendar year then you will need to adjust 1 or more earlier returns.
No addition for the private use of a car to a maximum of 500 km
You are not required to add the addition for the private use of a car when it transpires that your employee's private use of a car you have made available to the employee is limited to a maximum of 500 kilometres in a calendar year. More information is available in the 'Handboek Loonheffingen', chapter 23 (Payroll Taxes Manual, only available in Dutch).