Choosing a car is never easy, especially when it comes to a company vehicle. Whether it's advantageous depends on various factors. Do you intend to use the car for personal purposes, or are you considering an electric vehicle? Do you want to capitalize on the benefits of a youngtimer?

The bookkeeper for self-employed individuals in the Netherlands can assist you in making informed choices. The most advantageous car for your situation depends on various factors, making advice tailored to each situation crucial.

The Advantages of a Company Car

Did you know that a company car can be very cost-effective? However, its cost-effectiveness depends on the age and type of car you choose. There are fiscal and financial benefits to be gained, as certain expenses are deductible. This includes repair and fuel costs, as well as road tax and insurance. Consider VAT, for example. When purchasing a new car, you can reclaim the VAT, which is 21 percent of the purchase amount, in your VAT return.

Sounds appealing, doesn't it? But pay close attention if you drive more than 500 kilometers privately per year. Additionally, at the end of the fiscal year, you must pay 2.7 percent VAT on the catalog value of the car and calculate 22 percent over the new price, adding this to your profit. You pay income tax on it. When selling your car in the future, you will have to pay VAT again, but luckily, this time on the much lower selling price.

A Used Car as a Company Car

In general, using a used car – between two and fourteen years old – as a company car is less favorable. You can only depreciate the much lower purchase price. You have to pay yearly income tax over the 22 percent – based on the new value – if you drive more than 500 kilometers privately with the car each year. This 22 percent is calculated based on the new value (catalog value) of your car, even if the car you have in mind is already ten years old.

A Youngtimer is Fiscally Interesting

Should you, as a self-employed person, dismiss the idea of using a used car as a company car? No, certainly not. Sometimes old is better than new, especially for a self-employed person when it comes to choosing a business car. For entrepreneurs, so-called youngtimers (cars older than fifteen years) are fiscally interesting. For private use of these cars, you don't have to pay yearly 22 percent on the new value. There is a separate rate of 35 percent of the car's market value, significantly lower than the new value.

And rest assured, there are plenty of very representative cars to be found. These cars may have cost a lot back in the day, but you can now drive them very affordably. It's no wonder that many youngtimers are being imported from Germany to the Netherlands by car dealers. Not only is the price lower, and the selection larger, but there is also high demand among Dutch self-employed individuals.

Using a Private Car for Business Purposes

Perhaps you are considering using your private car for business trips. This is, of course, possible, but many costs such as fuel and insurance are not deductible. The advantage is that you don't have to pay the 22 percent yearly for the income tax. However, you can deduct 23 cents per business kilometer from your profit.

Summarizing

Navigating the world of business expenses requires careful consideration, particularly when it comes to choosing a company car. This decision holds significant financial implications that cannot be overlooked, and I hope this article has helped you get a bit more clear on your options.

Whether it's the appeal of reclaiming VAT on a new purchase or the enticing advantages of an experienced youngtimer, the pursuit of a cost-effective company vehicle is complex. Each option, whether it be a brand new, pre-owned, or classic car, presents its own unique benefits and drawbacks. By thoughtfully considering the fiscal and financial factors outlined in this article, self-employed individuals in the Netherlands can confidently navigate the terrain of company cars, ensuring their choice aligns seamlessly with their business goals and financial well-being.

If you have any questions about the best choice in your situation, feel free to get in touch through info@zzp-boekhouder.nl.