Do you run a business in the Netherlands and own a company car? Do you use your company car for private purposes? If so, you should know what is bijtelling. Ignorance of Dutch tax law can cost you dearly.
What is bijtelling?
Bijtelling is a Dutch tax surcharge for the private use of a company car. . It increases your income – the tax base, which results in a higher tax amount in the annual tax return.
When does the bijtelling obligation occur?
If you use your company car to drive more than 500 km a year for private purposes, your car usage is taxable. In the event of the Tax Office’s audit, you are obliged to produce a register of kilometres covered (kilometre log) with separate records for the distances covered on business and private trips. If you fail to meet this condition, the tax authority will impose a financial penalty on you.
What does the amount of bijtelling depend on?
Bijtelling depends on the list value of the car, i.e. the original price of the vehicle with the amount depending on vehicle type:
- 8% – for electric vehicles
- 22% – for combustion engine vehicles.
Bijtelling can therefore amount to a few thousand EUR or more.
How to avoid paying the bijtelling tax in the Netherlands?
There are two ways to avoid paying bijtelling in the Netherlands.
- The first one is to use the company car exclusively for business purposes.
- The second is to record every distance covered and specify which of the trips were on business and which were private. This will give you more control over the number of kilometres covered and allow you to avoid exceeding the 500 kilometre limit. Also, mobile apps can be useful for measuring and recording distances, e.g.: Easy Rit, Route Vision or Autolog.
A company car in the Netherlands used exclusively for business
The upside of using a company car only for business purposes is that any costs of using the vehicle are BTW (Dutch VAT) deductible, and these are:
- fuel
- depreciation
- parking fees
- insurance
- car repairs
- APK
- tyre replacement
- road tax
- lease instalments.
Use of a private car for business purposes
If you use your private car for work, you must keep a record of the kilometres covered when travelling for business purposes. When filling out your annual tax return, you should enter this cost as a business expense. For 2022, a flat rate of 0.19 EUR per kilometre can be deducted, which for most cars covers the actual cost of use. In this situation, you aren’t bound by any annual mileage limits and remain free to use the car privately.
Fiscal audits in the Netherlands
The Dutch Tax Authority Belastingdienst automatically carries out audits of both large, medium-sized, and small companies. If the system comes across any irregularities, you will receive an official letter informing you of a pending audit. A tax audit can be conducted remotely or personally at your premises. In the Netherlands, your company can also be drawn for audit by Belastingdienst for no particular reason. This is known as steekproefcontrole, which is Dutch for random audit.
The most important tax issues subject to tax audit in the Netherlands:
- correct accounting for BTW, i.e. VAT,
- correct and complete invoicing of the company’s turnover,
- correct deduction of business expenses,
- tax relief for entrepreneurs,
- proper administration of the company’s vehicles, including mileage-related accounts.
