DGA company car: tax choices and tips

Purchase car for the BV or privately?

As a DGA, you face a choice: do you purchase the car for the BV or do you drive the car privately? If you buy or lease the car in the name of the BV, all incurred car costs such as maintenance, insurance, and fuel are tax-deductible from profit. However, for private use, you will be subject to the addition to taxable income (bijtelling).

If you choose to keep the car privately, the BV may pay a tax-free mileage allowance for all business kilometres driven. Which option is most financially attractive depends on the ratio between business and private kilometres.

Avoid addition to taxable income (bijtelling) with mileage registration

Do you want to put a car on the BV but avoid the addition to taxable income (bijtelling)? This is possible if you drive no more than 500 kilometres privately per calendar year. You must be able to strictly prove this with accurate mileage registration.

In addition, investigate possible investment schemes when purchasing environmentally friendly cars. Read more about business investments and tax advantages when making an informed choice.

VAT adjustment for private use

In addition to income tax, VAT also plays an important role with company cars. In principle, the BV deducts the VAT on purchase, maintenance, and use as input tax.

Because you also use the car privately, a VAT adjustment for private use must be applied at the end of the financial year in the VAT return.

• Maintaining accurate mileage registration if there is no private use
• Annual processing of the VAT adjustment for private use
• Consultation with your accountant about the optimal setup

What role does CO2 emissions play in tax treatment?

When choosing a company car, CO2 emissions are an important factor that can influence its tax treatment. In particular, the amount of the addition to taxable income (bijtelling) is directly linked to the vehicle's emission values. Fully electric cars often benefit from more favourable bijtelling percentages, intended to encourage sustainable mobility. This lower bijtelling makes the purchase of an electric car more fiscally attractive for the DGA, positively impacting the operating costs of the company car.

It is essential when selecting a company car to consider not only the purchase price but also the annual tax impact of the bijtelling based on CO2 emissions. Although bijtelling percentages for electric cars are gradually increasing over the years, they remain lower than those for petrol cars. This difference can lead to significant savings over the lease contract term, optimising the total cost of ownership for the BV.

What happens when a company car is sold?

When a company car, registered in the name of the BV, is sold, this has tax implications for the company. The sale proceeds are compared with the book value of the car. If the selling price is higher than the book value, the BV realises a book profit. This book profit is subject to corporate income tax. If the selling price is lower than the book value, a book loss occurs, which is deductible from the BV's profit and can reduce the corporate income tax payable.

In addition to corporate income tax, VAT must also be considered. Upon the sale of a car that the BV previously purchased with VAT deduction, the BV must pay VAT on the selling price. It is therefore important when determining the value for sale to not only look at the market price but also consider the fiscal depreciation and VAT consequences to avoid unexpected settlements. Correct timing of the sale can also prove fiscally advantageous.

• Sale proceeds above book value: book profit (taxable).
• Sale proceeds below book value: book loss (deductible).
• VAT must be paid on the selling price if VAT was previously deducted.
• Consider depreciation and VAT when determining the valuation.

Frequently asked questions