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A company car is an attractive secondary employment benefit, but it requires careful agreements regarding taxation (taxable benefit), private use, and terms of use — laid down in a usage agreement. Without clear arrangements, you run the risk of tax reassessments and disputes. Below, you will find the options, the taxable benefit rules, and what you need to record.
Options for a company car
You can facilitate a company car in various ways:
- buy the car ;
- lease;
- to work with pool cars;
- provide reimbursement for business use of a private car.
Each option has its own implications, particularly regarding tax and company car tax. Weigh these carefully; an accountant can advise you on this.
Taxable benefit and private use
A taxable benefit is mandatory for private use exceeding 500 kilometers per year. The amount depends on factors including the list price and CO2 emissions; a low-emission car is often more favorable for tax purposes. You can avoid this taxable benefit by driving no more than 500 private kilometers per year — therefore, stipulate private use contractually (or prohibit it) to avoid disputes. For those who use the car exclusively for business purposes or for private use exceeding 500 km, a comprehensive logbook of journeys is required. TODO_VERIFY: the taxable benefit percentages, CO2 limits, and the 500 km rule may change annually — check the current rules with the Tax and Customs Administration.
What do you record regarding the use of the car?
Make clear agreements about who may use the car and under what conditions. Also consider special situations: a change of position, suspension, dismissal, and illness. Furthermore, record:
- the handling of claims and the authorized drivers;
- the parking of the car;
- a prohibition on use for other commercial purposes;
- maintenance and the installation of accessories (at own expense).
This is included in a Car Provision Agreement or Company Car Usage Agreement. Such an agreement is truly custom-made and is preferably drafted with legal support.
Frequently Asked Questions
When does tax apply to a company car?
For more than 500 private kilometers per year. The amount depends on the list price and CO2 emissions. Check the current percentages.
How do I avoid company car tax?
By driving no more than 500 private kilometers per year, stipulating this contractually (or prohibiting private use), and maintaining a comprehensive logbook of journeys.
What do I need to record regarding the company car?
Including who is allowed to drive, claims handling, use during illness/dismissal/suspension, storage, maintenance, and a prohibition on other commercial use.
Do I need a separate agreement?
Yes, a usage agreement or provision agreement is highly recommended to prevent misunderstandings and tax risks.
Have a car policy drawn up?
Properly arranging a company car requires legal precision. We draft a suitable car policy, car lease regulations , or usage agreement, or review your existing document.
Our employment law are happy to assist you. Schedule a no-obligation intake consultation.
