Business or private car use: what do you choose?

Registering the car to the business

If you purchase the car for business use, you can deduct all incurred car expenses from your profits. This includes fuel, maintenance, repairs, and insurance. However, if you also drive more than 500 kilometres privately per year with the car, you will face an addition to taxable income (bijtelling) for your income.

Continuing to use the car privately

If you choose to keep the car private, you pay all car expenses yourself. However, for every business kilometre driven, you can claim a fixed tax-free amount per kilometre from your business. To effectively utilise tax advantages for investments, it is advisable to look at business investment schemes.

• No addition to taxable income for private use
• Reimburse business mileage tax-free
• Simpler administration for infrequent business journeys

Which option suits you best?

The choice heavily depends on the number of kilometres you drive annually and the ratio between business and private journeys. For many business kilometres, registering the car to the business is often advantageous, whereas for predominantly private use, private driving might be smarter. When in doubt, always consult the current regulations of the Tax Authorities or your financial advisor.

What about the addition to taxable income (bijtelling) for business driving?

To avoid the addition to taxable income (bijtelling), you must not drive more than 500 kilometres privately per year with the company car. You must be able to prove this with a comprehensive mileage log, accurately recording all business and private kilometres. Without such a record, the Tax Authorities will assume the car is also used privately, and the addition to taxable income (bijtelling) will still be applied. A watertight administration is therefore essential if you want to avoid the addition to taxable income (bijtelling) and use the car exclusively for business purposes. Digital mileage logging systems can provide a solution here.

Which costs are deductible for private use with business journeys?

Apart from the mileage allowance, there are generally no other specific car costs you can deduct when using your private car for business journeys. This is in contrast to a company car, where almost all car-related costs (fuel, maintenance, insurance, depreciation, etc.) are directly deductible as business expenses. The mileage allowance is a fixed scheme that covers all costs. Correctly maintaining mileage records remains the most important action to optimally utilise the tax possibilities when driving a private car for business.

Frequently asked questions