If you drive fewer than 501 kilometres for private purposes in a calendar year using your company car, you can apply to the tax authorities for a Statement no private car use applications. In that case, your employer is not allowed to include the car allowance in your salary.
Proof
The onus is then on you to prove that you have driven fewer than 501 kilometres for private purposes in a year. If it subsequently transpires that you have driven more than 500 kilometres for private purposes, the Tax and Customs Administration will issue a back-payment notice for payroll tax. The additional tax assessment will not be issued to your employer, but will be sent directly to you. In addition to the income tax, the assessment will also include tax interest and a (usually hefty) fine.
The additional tax assessment will, however, be sent to your employer if they are aware that you have driven more than 500 kilometres for private purposes in your company car.
Mileage records
If you have a ‘No Private Use’ certificate for your car, you are not obliged to keep a (comprehensive) mileage log for your company car. You may prove in other ways that you have driven fewer than 501 kilometres for private use. At Court of Appeal of The Hague It has recently become clear once again that, without a (comprehensive) mileage log, it is often very difficult to meet this burden of proof.
In this case, the director of a private limited company has been provided with a Lexus by his employer. He also privately owns an Audi Q7. The tax authorities have issued him with a ‘Declaration of No Private Use of a Car’ for the Lexus.
The Tax and Customs Administration has asked the director to provide evidence, for the years 2011 to 2013 inclusive, that he drove fewer than 501 kilometres for private purposes in the Lexus during those years. The director replied that he had not kept a mileage log. The Court agrees that this is not required, but that other evidence is necessary. The Court adds that the burden of proof is such that it must be convincingly demonstrated that fewer than 501 kilometres were driven for private purposes in a calendar year using the company car.
In the District Court, the director’s simple statement that he had not driven the Lexus for private purposes was deemed sufficient. Before the Court of Appeal, he made a greater effort. He submitted mileage records drawn up retrospectively, which he subsequently amended. In addition, he provides evidence showing that approximately 10,000 kilometres were driven in his private car in each of the years mentioned. He also submits records from a software tool certified by the Tax and Customs Administration, which shows that, from 2015 to 2018 inclusive, he drove approximately the same number of business kilometres as is evident from the mileage statements submitted for 2011 to 2013 inclusive.
Additional tax assessments
The Court concludes that the director has not provided sufficiently convincing evidence that, in each of the years 2011 to 2013 inclusive, fewer than 501 kilometres were driven for private purposes in the Lexus. The additional tax assessments imposed therefore stand.
The amount of payroll tax payable is per year €21,899. The interest charged for the years in question amounts to: €2,492, €1,950 and €1,293. In this case, penalties were imposed only for 2011 and 2012: €2,500 and €1,950, but these amounts were reduced to €1,500 in the course of the proceedings.