Company car or private owned car?
If you keep the car private, you may travel for business kilometers (including commuting) If such than deductible 19 cents per kilometer from your profit. If you put the car on the balance sheet as company car, then all costs are deductible as business related expenses.
You do have to consider a fiscal adjustment for the income tax and for the VAT in connection with private use. Do you drive more than 500 kilometers private than the amount of the fiscal adjustment for private use is in principle 25% of the catalog value of your car. That can be lower with fuel-efficient, environmentally-friendly cars, namely 20% or 14%. The year that the vehicle has registered on the name of the first buyer that percentage is aplicable for the next five years.
If you can proof that you have <500 private kilometers per year by presenting a specification of your travel in KM’s you do not have to amend the fiscal adjustment. If the total car costs are less than the fiscal adjustment for the income tax, than the adjustment is limited to the amount of the actual car costs. In the financial statement (profit&loss) no car costs will be charged to the profit.
Please note: once you have made a choice to consider it as your company car, you cannot simply undo. This is only possible if there is a major change in use or change of the Dutch legislation.
Below breakdown of the fiscal adjustment based on the co2 emissions also applicable in current year 2019:
What about the car costs?
That depends on the number of private kilometers you drive.
I drive 500 km or less privatel by car per year:
Your car is considered by the Dutch tax office as company car: you have to put it on the name of the company. That means you have car costs that you can deduct from your profit.
We have listed the most common deductible costs for you:
✓ insurance costs
✓ maintenance and repair
✓ if you lease: lease costs and interest
✓ car wash
I drive more than 500 km private by car per year:
You may opt for income tax: do you keep the car private or company? You state your choice in the 1st income tax return that you do after you have purchased the car.
Your car is privately owned
If you use the car for business trips, you may deduct € 0.19 per kilometer from your profit. You can deduct the VAT related to the costs for use and maintenance, only if used for taxable turnover. You cannot deduct VAT for private use. In this case commuting also counts as private use.
VAT correction private use of company car
An entrepreneur who performs taxed services can deduct the VAT on the cost of a company car as input tax. Even if that car is also used for private purposes. In order to exclude deduction from private use a Vat correction in the last period is mandatory.
Did you not deduct the VAT when purchasing a car (for example, when purchasing a margin car or car)purchased from a private individual)? Then you need to apply for the private use correction 1.5% instead of 2.7%. Furthermore, the calculations remain the same. For cars 15 years and older private correction to be applied against the purchase value instead of the new catalogue value/list price.
To determine the private use, it makes a difference whether you keep a mileage administration:
You have a comprehensive mileage administration (excel template)
You pay VAT on actual private use. To determine this private use you must have registered the travel in KM’s. According this specification you can then calculate what the relationship between business use and private use. Do you have a correct specification? Than you can use the calculation tool to calculate VAT on private car to calculate the amount to pay in VAT: https://regelhulpenvoorbedrijven.nl/btwprivegebruikauto/
Do you not have a mileage administration?:
Then you aply 2.7% of the list price of the car,including VAT and BPM. This percentage of 2.7 also applies to the car that you use on the basis of an operational lease or financial lease.
You have purchased a car with a list price of € 45,000, including VAT and bpm. You have the VAT on the purchase, maintenance and use of this car fully deducted. You also use the car privately, but you do not have a specification of the KM’s according the format as approved by the Dutch tax authority. For private use you must then pay 2.7% x € 45,000 = € 1,215 VAT payable. If you buy the car during the course of the year, you can reduce the percentage by 2.7% proportionally.For example, if you buy the car on 1 September, you will pay 4/12 x 2.7% x € 45,000 = € 405 for private use.
To avoid workload in terms of filing of your mileage administration you can use a GPS tracking device such us Routevision which is approved by the Dutch Tax Office.