The tax rules for full electric cars will change as of the year 2019. It can still be very interesting to get a full electric company car before the end of 2018 in order to avoid the “Tesla tax”. In the below we give an overview of the current company car tax system as well as the changes for the coming years.
Bijtelling / adding benefit company car to salary
Having the benefit of a company car is seen as an income (“bijteling”), unless you drive it less than 500 kilometers per year for private use and you keep an administration of these kilometers.
When you buy a full electric car (only applicable when zero emission) car in 2018, you will fall under the 4% “bijtelling” (added taxable salary because of the benefit of driving a company car). This bijtelling is calculated over the gross catalogue value of the car, so when the catalogue value is EUR 40,000, the bijtelling is 4% x EUR 40,000 = EUR 1,600 which amount is added to your salary and taxed at the applicable progressive rate. So if the top of your salary falls in the 42% rate, the payable wage tax on the company car is EUR 1,600 x 42% = EUR 672.
This 4% bijtelling will remain applicable for 5 years as of the moment the car is first registered. Also when the car is sold so someone else this five year period (as started as of registration first owner) will remain. After those five years (so at the latest at the end of 2023) the bijtelling rate will go to 22%.
If you buy a full electric car in 2019 or 2020 the rules are different, still 4% bijtelling applies as long as the catalogue value of the car is below EUR 50,000. When the catalogue is higher than EUR 50,000, the excess will get a bijtelling of 22% (unless the fuel is water based). Also referred to as the Tesla-tax. So if the catalogue value is EUR 70,000, the first EUR 50,000 will have a bijtelling of 4% the remainder (EUR 20,000) will have a bijtelling of 22%. So it will be a mix of rates. As of 2021 the bijtelling rate will be 22% on all electric cars.
Corporate income tax
There is also a tax incentive for full electric cars for corporate income tax purposes. In 2018 there is an (environmental) deduction of 36% over the catalogue value till EUR 50,000 (only when the car is bought new), if the car is more expensive than on the excess the 36% deduction does not apply. It is obigatory to request this incentive by registering at the “RVO” agency within three months (after signing the purchase agreement with the car dealer) in order to obtain this incentive.
As far as the VAT refund, this is also applicable for non-electric cars, you can get a full refund of VAT when the car is bought (or financial lease) by the company. Also VAT on running costs can be deducted, however VAT has to be paid on private use, if no records of the private use is kept, you should pay a deemed VAT amount on annual basis, being 2,7% over the catalogue value.
Till 2021 no road tax for full electric cars, as of 2021 the normal road tax applies also on full electric cars.
Company owner with company car
In general company cars will become less attractive for tax purposes after 5 years, because there will be no more depreciation and the bijtelling in this case will increase considerably. So best to take it out of your company after five years. If the car has been fully depreciated in those five years, the gain on the sale is profit for your company. But you can take the market value which after five years may be limited at that time especially given the uncertain market for electric cars.
Please note that this is the (suggested) legislation as per 2018, rules may well change the coming years since as it stands now in a few years time the electrical will have the same tax treatment as regular fuelled cars, which may lead to electrical cars becoming far less interesting whilst the environmental rules the Netherlands has to meet are strict and becoming stricter for the coming years. So there may well be further more interesting change of the above legislation the coming years.
If you have any questions, or a concrete vehicle you wish to purchase, please contact us and we can advise further on the above.