Extra tax on petrol and diesel company cars for employees
- 17 August 2026
- Edited 20 August 2026
- 3 min
- Finance
- Managing and growing
- Gé Sletterink
From 1 January 2027, if you provide a company car to an employee who also uses the car privately, you may have to pay an extra tax. This tax applies to petrol, diesel, LPG, and hybrid cars. It does not apply to fully electric cars. A transitional arrangement until 2031 applies to company cars made available before this date. Read here what is changing next year.
What will change from 2027?
From 1 January 2027, you will pay an extra tax if you provide a petrol or diesel company car for the first time to an employee who also uses the car privately. This applies only to cars that are not fully electric.
The extra tax is called the pseudo final levy (pseudo-eindheffing). The levy is 12% per year of the car’s list price (including VAT and BPM).
Who pays the levy?
As a business owner, you pay the extra tax yourself via payroll taxes. You are not allowed to pass these costs on to your employee. The pseudo final levy is on top of the existing private use addition (bijtelling, in Dutch) for the private use of a company car. The levy does not replace the private use addition.
Example
In 2027, you provide a non-electric car with a list price of €40,000. The annual pseudo final levy is 12% of €40,000 = €4,800. The normal private use addition for the employee still applies to the private use of the car.
In practice, this means that from 2027 onwards, a fully electric car will usually be the most cost-effective option when providing a company car for an employee.
When does the pseudo final levy apply?
The extra tax applies if you make a passenger car available to an employee who is also allowed to use the car privately. Keep in mind that commuting between home and work also counts as private use in this context.
If the employee uses the car solely for business purposes and private use is not permitted, the pseudo final levy does not apply. However, you must be able to demonstrate that the car is not used privately.
Which cars does the scheme apply to?
The scheme applies to passenger cars that you offer to an employee for the first time on or after 1 January 2027. It does not only apply to cars that are brand new from the showroom. A second-hand car may also fall under the scheme.
The pseudo final levy applies to petrol cars, diesel cars, LPG cars, and hybrid passenger cars. Vans are excluded from the scheme.
The scheme may also apply to other vehicles that are treated as passenger cars for tax purposes.
Transitional arrangement for existing company cars
Do you provide a company car before 1 January 2027? If so, a transitional arrangement applies. You will not pay any pseudo final levy on this car until 1 January 2031.
The transitional arrangement remains in force if the same car is reassigned to another employee within your business. If an employee moves to another employer with the same car, the transitional arrangement does not automatically apply. However, in the event of a merger or business takeover, the transitional arrangement remains.
Replacement car in the event of damage or maintenance
Is your employee’s electric car unavailable due to repairs, a breakdown, or long-term maintenance? In that case, an electric car may not be available as a replacement. So an exception applies to replacement transport. You may then provide a non-electric replacement car for a maximum of 14 consecutive calendar days without having to pay the pseudo final levy.
If the employee’s electric car is unavailable again later, you may apply the exception again.
Temporary non-electric hire car
Sometimes you need extra transport temporarily. For example, for a project, a busy period, or because another car is not yet available. Until 1 January 2031, you may, subject to certain conditions, use a non-electric hire car temporarily. This is permitted for a maximum of 7 consecutive calendar days and once per year per car. Keep a record of the hire period and the reason why you needed the car.
Exception for driving schools
Driving schools are exempt from the pseudo final levy. A learner must be able to take the Category B driving test in a car with a manual gearbox, which fully electric cars do not have.
What can you do now?
Do you have employees with company cars? If so, think in advance about what choices you will need to make in the coming years. Consider, for example:
- which cars you have currently made available
- when lease contracts expire
- which cars you want to replace in the coming years
- whether electric driving is practical and feasible for your business activities
Switching to fully electric driving
Do you want to provide a company car from 2027 onwards? If so, a fully electric car is the way to avoid the pseudo final levy.
Is an electric car not yet practical or suitable for your business? For example, due to usage, range, charging options, or other business circumstances? If so, see if you can provide your employee with the car before 1 January 2027. A car made available before 1 January 2027 is covered by the transitional arrangement until 2031. Please note, however, that simply signing a contract or placing an order is not enough. The car must actually be available for the employee before that date.
FAQs
Yes. For the pseudo final levy, traveling between work and home counts as private use. So the extra tax may also apply if an employee does not use the car for other private trips.
No. Cars that you made available before 1 January 2027 will be covered by the transitional arrangement until 2031.
The pseudo final levy applies if you as an employer provide a car to an employee who also uses this car privately.
A partner in a VOF, a partner in a maatschap, or the owner of an eenmanszaak is not normally an employee of the business. The situation may be different for a BV: a manager director may be an employee of the BV.
