Private Use of Company Car and the 'Bijtelling': What You Need to Know

As an entrepreneur, it can be attractive to drive a 'company car'. However, when you also use this car privately, the Tax Authorities ('Belastingdienst') see this as a form of salary. You have to pay tax on this 'benefit', which is called the 'bijtelling'. Administratiekantoor Zandwijken, located in Aalsmeer, helps many freelancers and SMEs to correctly calculate and declare this 'bijtelling'. It is important to understand that the 'bijtelling' depends on the list price of the car and the CO2 emissions (although this is now the same for most cars). So it's crucial to map this out correctly.

The 'bijtelling' is calculated as a percentage of the list price of the car. In 2024, this percentage is usually 22%. Suppose you drive a car with a list price of €40,000. The 'bijtelling' is then 22% of €40,000, which amounts to €8,800 per year. This amount is added to your income, so you pay income tax on it. So it is important to realize that you will have less net income than you might think. Good administration, such as that provided by Administratiekantoor Zandwijken, is essential in this regard.

There is a way to avoid the 'bijtelling': prove that you drive no more than 500 kilometers privately per year with the company car. You must demonstrate this with a complete mileage registration. This can be done manually, but there are also systems that keep track of this automatically. Please note: the Tax Authorities strictly check these mileage registrations. So make sure you have a correct and complete administration. Administratiekantoor Zandwijken advises you to take this seriously from the start.

A complete mileage registration contains the following information: the date, the start and end mileage, the address of departure and arrival, the route taken (if different from the most common route) and the purpose of the trip (business or private). Make sure you note this per trip and keep any invoices or appointments that can support the business trips. Use a spreadsheet, an app or a special mileage registration system. It is important that the registration is consistent and reliable. The Tax Authorities may ask for proof during an audit.

The net costs of the 'bijtelling' depend on your personal tax rate. Suppose you fall into the tax bracket of 36.93% (2024 rate). In the aforementioned example with a 'bijtelling' of €8,800, you pay 36.93% tax on this, which amounts to €3,250.24 per year. This is the amount you have less net income. It is wise to calculate this properly in advance so that you are not faced with surprises. Administratiekantoor Zandwijken can help you with a personal calculation.

If the 'bijtelling' turns out to be disadvantageous, there are alternatives. For example, you can opt for a private car and declare the business kilometers. You can then deduct €0.23 per kilometer. Another option is to lease a car. Compare the different options carefully and see which is most beneficial in your situation. Seek advice from an expert, such as Administratiekantoor Zandwijken, to make the best choice.

More favorable rules often apply to electric cars with regard to the 'bijtelling'. A lower 'bijtelling' percentage may apply, depending on the date of first admission and the list price. Please note that these rules change regularly, so it is important to stay informed of current legislation. Check the website of the Tax Authorities or seek advice from Administratiekantoor Zandwijken for the most recent information.