The Advocate General (AG) The Supreme Court has concluded that the possibility of an employee making private use of a company car is sufficient for the flat-rate car allowance to apply. The additional income tax was therefore rightly levied on the employer. Furthermore, according to the Court of Appeal, the fine of €5,000 is appropriate and justified. Naturally, the Supreme Court will have the final say in this case.
The case
This case concerns a home care organisation (with around 90 employees). It owns nine small (older) passenger cars, which are mainly used by employees for visits to patients. The cars are used in rotation by different employees, depending on the needs of their shift and which car is available.
At the start of their shift, employees collect the keys and the car from the employer’s office. At the end of their shift, they park the car there again and hand in the keys. Depending on the nature of their work, the cars are sometimes taken home. The employer has informed employees in writing that the cars must not be used for private purposes (with a fine of €250 as a penalty). No mileage records are kept.
Private use
The AG concludes that the option for private use is sufficient for the purposes of applying the flat-rate car allowance. And in the present case, the employees had that option. After all, whilst the car was at their disposal, they were also able to use it (to a limited extent) for private purposes.
Once it has been established that the employee has the option of using the car for private purposes, the extent of the actual private use is no longer relevant. The salary component is then valued on a flat-rate basis at 25% of the catalogue value. This flat-rate valuation applies to 2017. Lower additional tax liability percentages applied in previous years. See also our factsheet Taxable amount for private use of a car.
Incidentally, in this case, the Tax and Customs Administration also presented evidence that there had in fact been some private use. To this end, the Tax and Customs Administration had at its disposal statements from employees and former employees, as well as 61 records of the use of the cars at various locations in the Netherlands, outside office hours and/or outside the region in which the employer operates. The employer was unable to refute all 61 of these records. These included, amongst others, seven records of private use by employees who were subsequently dismissed by the employer for that reason.
Employer’s invoice
As indicated above, the Tax and Customs Administration has issued the employer with additional payroll tax assessments. In such cases, the general rule under payroll tax legislation is that additional tax is assessed on the basis of the final levy. This means that the payroll tax is payable by the employer. In this case, the tax has been calculated on the basis of the grossed-up final levy rate of 72.4%. In addition, the income-related contribution under the Health Insurance Act has been assessed retrospectively.
Under tax legislation, the employer is therefore fully liable for payroll tax. Whether the employer can recover this tax from the employees depends on the agreements made with them in this regard. In practice, it will not always be possible to exercise this right of recovery. For example, not if the employee in question has left the company.