How does a company car work in The Netherlands?
First, let’s briefly explain what a “auto van de zaak” exactly is. This may seem obvious, but did you know that not every company car automatically qualifies as a “auto van de zaak”? Many companies have a number of cars that employees can borrow, for example, to drive to a client meeting. You can only use company cars during working hours because they are not intended for personal trips. This is a big difference compared to a “auto van de zaak,” which you are allowed to take home and use at all times.
Lease company car
A “auto van de zaak” is often a lease car, but it can also be purchased. For you as an employee, it doesn’t matter whether the car is owned by your employer or if it’s rented or leased for you. In both cases, the car is primarily intended for business use, but you are also allowed to use it for personal purposes. The big advantage of such a business (lease) car is that it saves you a lot of costs. You don’t have to buy a car yourself, and your employer is also responsible for maintenance and car insurance.
The costs
Although you receive a company car from your employer and it can save you a lot of money, that doesn’t mean there are no costs for you. If you also use the car privately, you will have to deal with a taxable benefit called “bijtelling.” Additionally, your employer may ask you for a monthly contribution. It’s important to be well aware of these costs and rules before opting for a company car.
When do you get a company car?
Do you think a company car sounds appealing? Whether you get one depends on your employer. It’s not a right but rather a kind of bonus that can be part of your secondary employment conditions. Your employer is not obligated to provide you with one. The higher your position, the greater the chance of being offered a company car. Also, employees who travel a lot for business purposes may sometimes receive a company car.
Private use of a company car: what’s involved?
So, you are allowed to use a company car outside working hours, but you’ll have to pay for it if you drive more than 500 kilometers per year for personal reasons. You then pay a benefit in kind to the Tax Authorities. Additionally, many employers charge a personal contribution if you make private kilometers with the company car. What exactly do these “bijtelling” and personal contributions entail?
Bijtelling for a company car
“Bijtelling” is a tax regulation for business lease drivers who also use the car for personal purposes. You’ll encounter this tax if you drive more than 500 private kilometers with the company car in one year. You pay this tax because the Tax Authorities see those kilometers as a kind of non-cash benefit. An extra reward that would remain tax-free without the “bijtelling.” The amount of the “bijtelling” depends on the car you drive, or rather its value, emissions, and the year the car was registered.
If you don’t or hardly use the car for private purposes, you don’t have to pay “bijtelling.” Apply for the “Declaration of no private use of a car” for this. It’s important to be able to prove that you (almost) exclusively use the car for business purposes, so it’s wise to keep a mileage log.
Personal contribution for a company car
If you want to know how a lease car affects your salary, you also need to find out if you have to pay a personal contribution for the company car. Your employer may ask you for this contribution if you want to use the car privately, but they don’t have to. Usually, these costs are automatically deducted from your salary. The exact amount depends on the type of car you lease.
Your employer may also ask for a personal contribution if you exceed the standard lease amount. This may sound complicated, but it basically means that you are driving a car that doesn’t fit within the lease budget. For example, if the standard lease amount at your company is a maximum of €400 per month, but you’ve set your sights on a more expensive model at €450 per month. In that case, you’ll pay a monthly personal contribution for the company car of at least €50.
Although this personal contribution means additional costs for business driving, it’s not all bad news. You can deduct the personal contribution for a company car from your “bijtelling.” That saves you some money.
What is smarter: a company car or purchasing your own?
Are you torn between a company car and a personal car? Understandable, because there are various pros and cons to business driving. We’ll list a few important points that can help you decide between a company car or a personal car.
- Cost-saving. With a (lease) company car, you save on purchase, maintenance, and insurance costs.
- Nice cars. Appealing to car enthusiasts: most employers provide more expensive, high-quality cars. So, you can drive a nice car at a low price.
- Fuel card. There’s a good chance you’ll also get a fuel card with the car. This saves you on fuel costs too.
- Extra costs. You probably save overall by driving a company car, but don’t forget that there are associated costs. If you use the car privately, you pay “bijtelling” and possibly a personal contribution.
- No private kilometers? No “bijtelling.” Those additional costs (partially) disappear if you don’t use the car privately. This makes business driving even more advantageous.
- No accumulation of no-claim years. When you switch back to a personal car after having a company car, it’s nice to have accrued some no-claim years. No-claim years result in a lower premium for your car insurance. However, it can be difficult to prove this if you’ve been driving a company car.
- The car is not yours. This is both an advantage and a disadvantage. For example, your employer covers the costs of certain damages, but on the other hand, you don’t have your own car that you gradually pay off and becomes your property. And if you take a temporary break, you’re likely to be without your own means of transport.
It’s up to you to weigh the pros and cons and determine what’s more advantageous in your case. You can make your own calculation using this link.