Private use of a company car

3 tips for private use of a company car

For many SMEs, it's a nice perk: they can use their company car privately, such as for weekend family outings. You can also make employees happy with this option. However, it is important to follow some ground rules. In this article, we will give you 3 concrete tips.

It's great to get in the car for an outing on the weekend. The Netherlands has plenty of cultural places to go with the family. SMEs are in the enviable position of being able to use their company cars for this purpose. Or they take the company's van and head out into nature with a bunch of friends. Whatever you choose, the tips in this article will help tackle any concerns you may have.

Tip 1: Follow the rules of the tax authorities.

As a business owner, you pay tax on your turnover, VAT. However, if you incur business expenses yourself, you can deduct the VAT from these amounts as input tax. The following rules apply to company cars - whether purchased or leased.

To the extent that you use the car or van for business activities, you can deduct the VAT on its purchase, maintenance and use. However, you must pay VAT on the private use. Commuting also counts as private use in this context.

The tax authorities require you to be able to prove the extent to which you use the car for private purposes, for example with a log of kilometers driven. If you do not have such a log, the VAT you must pay for private use is set at 2.7% of the list price of the car, including VAT and bpm (passenger car tax).

Incidentally, there are companies that get 'creative' with the rules in order to pay less tax. This is strongly discouraged. If there is a court case, you may lose.

Tip 2: Establish rules for car use

As we have already highlighted, a company car can be owned by your company, but it can also be leased. You obviously treat your company car well, including in your spare time. To avoid problems later, however, it may be wise to establish rules for car use. Then everyone in your organization will know what they must adhere to.

The essence of such rules is that your employees look after the car with due care. They should look after it as if it were their own car and not let a stranger drive it, for example. Of course, they must not drive carelessly, such as by exceeding the speed limit. By the way, we at Avis can help formulate rules for car use.

Tip 3: Make an informed choice between buying and leasing

Also in terms of tax rules, there is no distinction between buying or leasing a company car. Of course, there are plenty of other differences between these two constructions.