The company car: young timers and George Orwell

Jan 5, 2016

When you make a company car available to your employee which may also be used for private purposes, the deemed income from the private use of this car is added to the employee’s taxable income/wages.

The addition is, in general, 25% of the car tax basis annually (the percentage may be lower depending on its CO2 emissions; full electrical cars 4% applies).
The tax base is normally the (high) Dutch consumer catalogue price of the car.
For a car bought outside the Netherlands the Dutch catalogue price (of the model itself or an equivalent car available in the Netherlands) should be used.

There is an exception for so-called young and old timers (cars older than 15 years). For these (understandably very popular) cars the addition is 35% of their usually much lower market value.
For instance, the annual cash difference in company car private use tax payment for a BMW 5 series of 14 years old compared to one of 15 years old is around EUR 5,000!

Another important exception to the 25% addition is that there is no addition at all for the private use of a car to a maximum of 500 km. The employee needs to prepare a proper set of kilometre accounts in order to prove that the private use of a company car is limited to a maximum of 500 kilometres in a calendar year.

This is where George Orwell’s Big Brother comes in.
The tax courts have now accepted the use of automatic number plate recognition (ANPR) data from the Dutch police (and therefore also the Dutch municipalities using environmental zones) for checking if the car was used for private purposes (for more than 500 km or while this was not included in the kilometre-accounts.) The same applies for the data from companies providing parking by smartphone (such as Parkline or SMSparking).