Last week we wrote a article on the Government’s plans to increase the tax allowance for the private use of electric cars. State Secretary Snel of Finance responds to Parliamentary questions that he does not wish to introduce a separate ‘youngtimer’ scheme for electric cars.
Youngtimer
For the private use of a company car, an additional tax liability must be included in your taxable income or salary. This additional tax liability amounts to 22% of the car’s list price. Fully electric cars are eligible for a discount of 18%, bringing the additional tax liability down to 4%. With effect from 2019, the discount applies only to the first €50,000 of the electric car’s list price.
A ‘youngtimer’ is a car that was first registered more than 15 years ago. For youngtimers, the additional tax liability is set at 35%. However, this 35% is not calculated on the basis of the car’s list price, but on the basis of its current market value. The 18% discount does not apply to youngtimers (though, of course, fully electric cars older than 15 years do not yet exist either).
As the value of a ‘youngtimer’ is much lower than its catalogue value, the additional tax liability for a ‘youngtimer’ is often significantly lower than for a car less than 15 years old. It goes without saying that youngtimers are therefore quite popular amongst business drivers (the State Secretary’s responses indicate that there were around 14,000 business-owned youngtimers on the roads in the Netherlands in 2016).
Polluting ‘youngtimers’ are better value for money
In fact, a CO₂-emitting ‘youngtimer’ offers greater tax advantages than a new, zero-emission electric car. This is certainly the case if the proposed increase in the additional tax liability for electric cars, due to come into effect from 2020, is implemented. The House of Representatives is therefore calling on the State Secretary to classify electric cars as ‘youngtimers’ at an earlier stage. Instead of after 15 years, for example, the additional tax liability for a fully electric car should amount to 35% (or less?) of the current market value after just 5 years. The State Secretary does not agree with this, but has announced that he will be presenting further plans for the second-hand car market.
Truc
RTL Nieuws reports on a possible way to avoid the threshold introduced in 2019. This rule applies to cars first registered on or after 1 January 2019, anywhere in the world. By importing a car registered abroad in 2018 into the Netherlands, the 4% additional tax liability will continue to apply to the total list price for quite some time. This is because the reduction in the additional tax liability percentage of 18% remains in force for 60 months following the month in which the car was first registered.