Drafting car lease regulations: this is what belongs in them

Drafting car lease regulations involves establishing in a single document who is entitled to a lease car, the applicable budget, how private use and tax liability are regulated, who bears damage, deductibles, and traffic fines, and when the car must be returned. The regulations are subsequently linked to the employment contract and demonstrably provided to the driver. Below, for each section, it is listed what should be included, which formulations hold up legally, and where regulations fail in practice.

The short answer

• Assignment: which positions are eligible and at what time.
• Budget and contribution: lease budget per category, personal contribution for more expensive choice.
• Private use: permitted or not, taxable benefit, mileage log, 500-kilometer limit.
• Damage: insurance, deductible and the limit of Article 7:661 of the Dutch Civil Code.
• Fines: pass-through, with the registered owner as the liable party.
• End of use: return upon termination of employment, exemption from work, and long-term illness.
• Final provisions: amendment clause, relationship to the employment contract, effective date.

Drafting car lease regulations: getting the basics right

Start with the scope. Describe which job groups are entitled to a car and which receive one because the position requires it. This distinction is important: a car that is part of the employment benefits package differs from a company van that serves purely as tools. Specify when the entitlement arises, for example, at the end of the probationary period, and whether a waiting list applies when the fleet is replaced.

Next, set the lease budgets per category, including what is and is not included in the standard amount: maintenance, insurance, tires, road tax, replacement transport, fuel, or charging power. Explicitly regulate what happens if the employee chooses a more expensive car. A personal contribution for private use is permitted and reduces the taxable benefit to a maximum of zero, but document the deduction from the net salary in writing.

Private use, taxable benefit, and the 500-kilometer limit

First, determine whether private use is permitted. If so, this constitutes remuneration in kind, and the employer processes the taxable benefit through the payroll administration. The taxable benefit is calculated on the list price including VAT and BPM; the standard percentage is 22 percent. For fully electric cars, a lower percentage applied to a portion of the list price for many years, but this discount has been phased out. Therefore, do not state a fixed percentage in the regulations, but refer to the rate applicable in the relevant year. This saves you an annual adjustment.

The taxable benefit is waived if the driver drives no more than 500 kilometers privately on a calendar year basis. Precisely define the rules surrounding this:

• The limit applies per calendar year, not per month. At 501 private kilometers, the taxable benefit is due for the entire year.
• If the car is available for only part of the year, the limit is recalculated on a time-based basis.
• Commuting counts as business use for payroll tax purposes. For VAT purposes, however, commuting is considered private use.
• The burden of proof lies with the driver. Specify which data the trip log contains: date, start and end odometer readings, departure and arrival addresses, the nature of the trip, and the deviating route.
• If an employee does not want to pay a taxable benefit, he applies for the Declaration of No Private Use of a Car from the Tax and Customs Administration himself. In principle, an additional assessment will then be levied against him, but not if the employer knew that the declaration was incorrect.

For delivery vans, additional options apply, such as the declaration of exclusively business use or a fixed final levy for continuous alternating use. Include these only if they are actually applicable.

Damage, deductible and fines

This is the area where regulations most often fall short. The employer is the contracting party with the leasing company, so damage and the deductible initially fall to him. Passing on costs to the employee is only possible to a limited extent. Article 7:661 of the Dutch Civil Code stipulates that an employee who causes damage in the performance of his work is not liable for it to his employer, unless there is intent or conscious recklessness. Inattention or an error of judgment in traffic generally does not meet that threshold. Deviating from the general rule is only permitted in writing, and only insofar as the employee is insured for that damage.

A clause with a limited deductible per claim, with a maximum per calendar year, is therefore practically workable. The higher the amount, the more critically a judge will review it. Additionally, stipulate:

• Insurance: what coverage is provided by the leasing company and what is explicitly excluded.
• Damage outside working hours or caused by a third party: who is authorized to drive the car and what applies if an unauthorized driver causes damage.
• Exclusion cases: driving under the influence, without a valid driving licence, during a driving ban, or with incorrect fuel or charging method.
• Reporting obligation: report damage within 24 hours using a fully completed claim form.

Traffic fines are separate from this. For violations settled administratively, the vehicle owner is liable. This is the leasing company, which passes on the fine plus administrative costs to the employer. If you wish to recover these from the driver, you require an explicit provision for this. For more serious violations, the driver's details can be passed on, after which the sanction will be issued in the driver's name. When implementing this, bear in mind that offsetting against wages is legally limited and that the net wage may not fall below the statutory minimum wage. Withholding on a case-by-case basis with consent is safer than a generic automatic offsetting.

End of use and final provisions

Stipulate that the car, along with keys, fuel card, charging card, charging cable, and registration papers, must be returned on the last working day, or earlier in the event of exemption from work or suspension. Describe the condition report and the distinction between normal wear and tear and repair costs, as this is where most disputes arise upon return. Also address long-term incapacity for work: many employers apply a time limit after which the car is repossessed, but this is only effective if it has been determined in writing beforehand.

Conclude with a modification clause, the relationship to the employment contract and any applicable collective labour agreement, the effective date, and a signature line or demonstrable acceptance. If you use a track-and-trace system or digital trip registration, describe the purpose, the retention period, and who has access to the data; in the case of an employee tracking system, the Works Council has the right of consent.

A brief real-life example: a wholesaler with twelve lease cars drafted its own regulations, including a provision stating that all damage is at the driver's expense. During the first collision, that provision proved unusable, because a written deviation from Article 7:661 of the Dutch Civil Code is only valid insofar as the employee is insured. However, with a deductible of 350 euros per incident, the case was successful.

Honest recommendation

You do not need a lawyer for a large part of this work. You write the determination of the lease budgets, the choice of leasing company, the list of brands, the agreements regarding refueling, charging, maintenance, tires and cleaning, and the practical reporting procedures yourself. If you have one car that is used exclusively by the director-major shareholder, a brief written agreement regarding private use and tax liability suffices; a full set of regulations is then unnecessary.

Ensure the legal core is checked as soon as staff start driving the vehicle. The provisions regarding recovery of damages, deductibles, passing on of fines, offsetting against wages, the modification clause, and repossession upon illness or termination of employment are the sections that will fail if they are not formulated correctly. One failed recovery typically costs more than having the entire document reviewed.

Read more: what is car lease regulations and having car lease regulations drafted. For a custom document: car lease regulations.

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