Private lease for self-employed professionals

As an entrepreneur you may need a business vehicle. You can either choose to partly use a private vehicle for business purposes or you could buy a company vehicle. Another option is private lease. Leasing a vehicle as a private person can be an interesting option for entrepreneurs. Read more about the advantages and disadvantages of private lease.

Private lease has been growing for several years. As of December 2019, private lease makes up 20% percent of all private cars leased by companies that are member of the Dutch lease car association VNA. In total, the market has increased over 25%, from 150,000 in 2018 to 188,000 at the end of 2019 (Source: VNA lease).

What makes private lease interesting?

Money remains available for business

Savings that you reserve for the purchase of a vehicle can be used for something else, for example, for your company or for private expenses. If you opt for private lease, the leasing company purchases the vehicle. You pay a fixed monthly amount to the leasing company.

Security of expenditure

With a private lease contract you have a better overview of what you spend on your vehicle each month. You don't have to worry about garage costs. The only additional costs are fuel, any traffic fines or private risk sums (eigen risico) in the event of damage.

No high interest for loans

If you have no savings to buy a vehicle, private lease may be a better option than taking out a loan. These types of loans often have high interest rates.

Tax benefits for entrepreneurs

If you use your vehicle for business purposes, you can prevent income addition for tax purposes (bijtelling) by taking out a private lease. You conclude the lease contract privately. This allows you to deduct € 0.19 per business kilometre (in Dutch) as costs from your profit.

Deducting VAT on usage and maintenance costs is also an option if you use the vehicle for business purposes. You must keep track of your business kilometres for the Tax Administration. Note: if you decide to deduct these costs, you cannot include them in the lease costs and package choice.

Lease a used car

Do you think that a new vehicle is too expensive? Or do you think that you won’t be using your vehicle much? Then you can save money by leasing a used vehicle.

Good to know

Influence on maximum mortgage

Are you planning to buy a house? Lease obligations reduce your maximum mortgage amount, just like other repayment obligations. With a monthly lease obligation of € 400, you can borrow several tens of thousands of euros less.

BKR registration

If you enter into a private lease contract, this will be registered with Stichting BKR (in Dutch). Registration does not have to be a disadvantage. If you meet your financial obligations every month, your future lenders will conclude that you are perfectly capable of handling your financial responsibilities.

Kilometre bundle

You choose a kilometre bundle depending on how many kilometres per year you plan to drive. Kilometres that fall outside the agreed bundle are more expensive than kilometres that fall within the bundle. With few business kilometres you can deduct less tax.

Monthly terms

The lease term must be paid monthly. Since the lease conditions in the contract are very strict, private lease is not recommended with strong monthly income fluctuations. A short-lease product may offer a solution, as it can be cancelled on a monthly basis.

Breach of contract

You cannot just cancel a lease contract. The costs of a breach of contract with a private lease are high. Relocation, divorce or periods of few assignments often lead to the dissolution of the private lease contract. Tip: you can dissolve your contract free of charge with a pre-made protective construction, for which you pay extra.

Climate agreement and private lease

The Climate Agreement (in Dutch) is part of the Dutch climate policy. It is an agreement between organisations and companies in the Netherlands to further combat global warming. The aim is to reduce CO2 emissions by 49% by 2030. As part of the Climate Agreement, an increasing number of car lease companies will allow lease drivers to share their electric private lease cars. The car lease companies will also collaborate with car-sharing platforms and neighbour-car-like initiatives.

Subsidy Scheme Electric Passenger Cars Private Individuals (SEPP)

Do you drive a fully electric passenger car in the smaller or compact middle class via private lease? Then you may be eligible for the Subsidy Scheme Electric Passenger Cars Private Individuals (Subsidieregeling Elektrische Personenauto’s Particulieren, SEPP). The subsidy scheme applies to both new (€4,000) and used (€2,000) electric passenger cars. Please note: no budget (in Dutch) is left available this year. In 2021, the annual budget will be €1,404,000.

Do you want to invest in a new machine, truck or other business asset? Then consider leasing as a form of financing.

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