An employee did not convincingly prove that trips with the company car were business-related. So said Court of Appeal Den Bosch in a recent ruling.
Declaration of no private use
At the employee's request, the Tax Administration issued a Statement of No Private Use for the company car. Based on this declaration, the employer does not pay income tax for the car in its payroll records. The condition is that the employee did not drive more than 500 private kilometres with the car in a calendar year.
The Inland Revenue asks the employee for substantiation that this condition has been met. To do so, the employee sends a trip record and additional information to the Tax Office. The trip record includes kilometres for trips in the context of:
- visiting restaurants;
- the place where the employee enjoys fitness, under the guidance of a personal trainer;
- visits to the golf course.
Convincingly demonstrate
Proving that no more than 500 private kilometres were driven with a company car rests with the driver of the car. This involves the very heavy burden of “convincing proof”. The Court agrees with the Tax Court that the employee failed to do so.
The business nature of the trips to the restaurants is substantiated by the employee as follows. The trip involved a lunch with his stepdaughter during which it was discussed what work the employee could carry out for the stepdaughter's company. The statement - apparently drawn up by the employee - by the stepdaughter is not considered sufficient evidence by the Court. The same applies to the offer for work towards the stepdaughter's company drawn up more than two years after the lunch.
With regard to fitness, the Court considers that the private element predominates. Indeed, the fitness sessions are good for the employee's general wellbeing. To the extent that it must be assumed that the fitness sessions are both business and private in nature, there is no question of journeys that would not have been made by someone who was in the same circumstances as the employee in terms of income assets and family, but who is not employed.
The Court (unfortunately) does not get around to assessing the trips to the golf course because the judgements on the trips to the restaurants and to the gym already exceed 500 kilometres.
After-tax charge borne by employee
The court concluded that the Tax Authorities were right to impose a retrospective payroll tax assessment on the employee (because the employee obtained a Certificate of No Private Use, the retrospective assessment was not imposed on the employer). Tax interest (€208) was charged on the retrospective wage tax assessment (€4,461) and the Tax Administration imposed a default penalty (of €1,115). The court upheld this, noting that the fine had already been reduced by 10% by the court (to €1,003) in connection with the exceeding of the reasonable time limit for handling the case.