How do you include your company car in your 2017 income tax return? The answer is simple: this information is already included in the annual statement provided by your employer. You simply copy the details from your annual statement into your tax return (these details are usually included in the Pre-filled Tax Return, or VIA).
Entrepreneurs and those deriving income from other activities must include the car in their profits or income themselves.
Company car
The term ‘company car’ refers to a car provided by your employer for use for private purposes as well. Or it refers to a car that a business owner or beneficiary of the profits includes in the business’s or profit-sharing assets.
This could be a passenger car or a van. It is sufficient that you have the option of using the car for private purposes. Whether you actually do so is irrelevant.
You will only be exempt from the additional tax liability if you can demonstrate, using a comprehensive mileage log, that you have not driven more than 500 private kilometres in a calendar year using your company car. Your commuting mileage counts as business mileage for this purpose. If you drive several company cars in a single year, there’s a catch when it comes to tax. We explain this in our article on sequential cars.
Even without a comprehensive mileage log, there are ways to avoid the additional tax liability. However, each of these options has its own pros and cons. Would you like to find out more? If so, please contact Get in touch with our advisers.
Addition
For the private use of your company car, your employer must include an additional tax liability in your taxable pay as part of your payroll records. You pay income tax on this additional tax liability. As this additional tax liability is included in your pay, it also forms part of your income from work and home (Box 1). The income tax deducted is set off against your income tax liability.
The additional tax liability amounts to 22% of the car’s (tax) list price. For a car that emits no CO₂, 4% of the list price is added. Your car must therefore be powered exclusively by electricity (as a hybrid car does emit CO₂). The percentages mentioned apply to cars registered after 31 December 2016.
Different additional tax liability percentages apply to older cars. That old percentage remains in force for 60 months following the month in which the car was first registered. For most older cars, this means that after those 60 months, the additional tax liability will be 25% of the list price. For details of this scheme, please refer to our comprehensive note.
The additional tax liability of 25% for older cars, compared with 22% for new cars, is regarded as unfair. The Association for Business Drivers (VZR) brought this matter before the tax court, but without success.
Different additional tax rates apply to modern classic and vintage cars.
Personal contribution
Many employees pay their employer a contribution for the private use of their company car. This amount is deducted from the imputed income. As a result, the imputed income never becomes negative.
Naturally, your personal contribution must also be included in your employer’s payroll records. This means that your personal contribution will also be included in the annual statement your employer provides you with.