Company car or private?
- Gé Sletterink
- 26 Apr 2023
- Edited 9 Feb 2023
- 5 min
- Managing and growing
You may need a car for your business. You could buy the car in the name of your company or you could use your private car for business purposes. Driving for business purposes has consequences for income tax and VAT. How does it work and what does it mean for you?
Driving for business purposes and income tax
For income tax, your car counts as entrepreneurial capital. That is why it is mandatory to have a company car if you:
- qualify as an entrepreneur for income tax purposes;
- use the car for your business;
- do not drive more than 500 kilometres per year for private purposes.
Deductible car expenses
If you have a company car, this counts as entrepreneurial capital. That also means that you can deduct the car expenses from your profit. Examples of car expenses are:
- parking costs
- vehicle tax
Are you buying a car especially for your business? Then you may also deduct the purchase cost from your profit. Not all at once, but through depreciation (also known as amortisation). During the years that you use the car, you deduct a portion of the purchase price per year.
For some vehicles, such as hydrogen cars and electric cars, you may be eligible for an environmental investment allowance.
How does a company lease car work?
Do you have a company lease car? Depending on the type of lease, you can deduct your costs. With an operational lease, the full monthly lease invoices are deductible. With a financial lease, the instalments also include an amount for repayment. The repayment portion of the instalments is not deductible.
Determine the value of your private car
Do you already have a car and are you going to use it for your business? Then you need to determine the value of your car at the time you switch to business use. You can write off this value. The depreciation and the car expenses listed above are deductible.
Additional tax liability (bijtelling)
Do you use the company car for private purposes as well? Then you must add an amount for private use to the taxable profit in your (corporate) income tax return. This is called the additional tax liability (bijtelling). How much you have to add depends on the list price of the car, the level of CO2 emission, and the issue date of the license plate. You can bypass the additional tax liability if you keep a detailed trip administration that demonstrates you do not drive over 500 kilometres for private purposes.
Electric vehicles and your business
If you drive an electric car, you will still benefit from a reduced additional tax rate of 16% up to a maximum of €30,000 in 2023 and 2024.
As electric cars are becoming increasingly cheaper and electric driving is becoming the norm, this scheme will not continue. In 2026, you will pay the same rate as non-electric vehicles. You will still be able to receive subsidies for an electric car via the MIA or VAMIL schemes.
Besides any financial benefits, driving electric is a smart choice. As of 2025, at least 30 Dutch cities will be introducing zero-emission zones (in Dutch). Delivery vans and lorries that emit CO2 will then no longer be allowed in the city.
Cars between 15 and 25 years old are called ‘youngtimers’. The additional tax liability rate for company youngtimers is 35%. This is calculated over the current value of the car, not over the original list price. You can have the current value reassessed every year.
Choose between company car or private car
If you drive more than 500 kilometres per year, you can choose whether to keep your car for business or private use. You can make one choice per car. You need to choose by the time you file your first digital income tax return after purchase.
Will you keep the car for private use? If so, you cannot deduct any car expenses from your company profit. However, you may deduct 21 eurocents from the profit for each kilometre driven for business purposes. This business mileage allowance is particularly interesting if you drive many kilometres for your business.
Company car and VAT
Are you an entrepreneur for VAT purposes and does your company deduct VAT? Then you can also choose whether you have a company or private car for VAT purposes. This may be a different choice than for income tax. You may deduct the VAT on certain car expenses, but you must pay an additional charge for the private use of the company car.
Putting a car in your company’s name
When you buy a car, you have to transfer the registration certificate of the car to the new owner. That is your company, or you personally. It depends on your legal structure. Do you have a sole proprietorship (eenmanszaak)? Then you can only register the car in your own name. With other legal structures, you can choose to have the vehicle registered in your company's name. You can find more information at the Netherlands Vehicle Authority (RDW).
What does it mean for you?
Use our tool (in Dutch) to calculate the costs of a company car and a private car, and compare your options.
Please note: this tool is only available in Dutch.
Delivery vans and ‘grey’ vehicle registration
You can also choose a delivery van with a ‘grey’ vehicle registration. For this you pay a lower rate for motor vehicle tax and are exempt from private vehicle and motorcycle tax (bpm) thanks to the entrepreneurs scheme (in Dutch). The delivery vehicle must meet a number of requirements before it becomes a grey registration vehicle. This includes the layout of the delivery van. For example, it must be primarily equipped for goods transport and the maximum weight may not exceed 3,500 kilos.
As an entrepreneur, you must also meet certain conditions:
- you are an entrepreneur for turnover tax purposes and have a VAT number
- the delivery van is in your name and you are the (legal) person to whom the VAT number has been allocated
- you drive more than 10% of the annual kilometres for your business
Do you only use the van for business trips? Then fill in the declaration 'Uitsluitend zakelijk gebruik bestelauto' (in Dutch, 'Van used exclusively for business') via Mijn Belastingdienst. Then you no longer need to keep a record of your trips.
Will you buy the delivery van or choose a financial lease contract? Then you are probably eligible for the small projects investment credit (KIA). You may also qualify for the environmental investment allowance (MIA) or random depreciation of environmental investments (VAMIL).
You can also choose a company motorbike. Its business use must be plausible. And you must use the motorbike at least 10% of the time for your business. The costs of the motorbike are deductible from your profit, just like with a company car. This includes necessary accessories such as a motorbike helmet, protective clothing, and boots. You write off the purchase costs. You can use the small projects investment credit (kleinschaligheidsinvesteringsaftrek, KIA)
Leasing a motorbike
You can also lease a company motorbike. Depending on the type of lease, you can deduct costs. With operational leasing, the full monthly lease invoices are deductible. With financial leasing, the instalments include an amount for repayment. The repayment portion of the instalments is not deductible.
No fixed additional tax liability
Unlike the company car, there is no fixed additional tax liability for a company motorbike. Instead, the additional tax liability is based on the actual costs for private use. For example, if you drive 20% of the kilometres privately, you will count 20% of the cost of the motorbike (including depreciation) as additional taxable tax liability. Your travel to and from work counts as business kilometres for the purpose of this deduction. It is not required to keep mileage records but it is recommended.
You may deduct the VAT paid on costs for the business use of the motorbike as advance tax. Travel to and from work counts as private kilometres for VAT purposes. There is therefore a different private-to-business ratio for VAT purposes when compared to the cost deduction.
Do you ride business kilometres on your private motorbike? Then you can deduct 21 cents from your profit for every business kilometre driven.