additional tax liability company car

Change to additional tax liability for more than one company car

Change to additional tax liability  for more than one company car

25 May, 2021

On 1 January 2022, the additional tax liability will change for employees who have more than one company car at their disposal. The change only applies to employees who have not kept a comprehensive trip registration and who do not have a so-called ‘statement of no private use’.

Standard additional tax liability

Businesses that provide a company car for their staff to use are required by Dutch law to add a taxable wage amount in kind on top of the employee’s salary. The term we use for this is additional tax liability. The addition for use of a company car is added to the employee’s salary, seeing as the employee benefits from also using the car for private purposes.

The additional tax liability is a percentage of the vehicle’s catalogue value. It’s useful to know that the addition percentage for cars that emit limited or no CO2 is lower than for cars with higher CO2 emissions. Payroll tax is calculated on the employee’s salary including the additional tax liability that the employee has to pay.

If the employee is not authorised to use the car privately or uses the car privately for less than 500 km a year, the additional tax liability won’t apply if the employee keeps a complete trip log and has a statement of no private use. If the trip registration isn’t complete or if the employee does not have the above statement, the employer is obliged to apply the additional tax liability. The statement of no private use has to be registered in the employer’s payroll system.

More than one company car

The additional tax liability for employees with more than one company car at their disposal has been changed. Obviously, the additional tax liability will only be calculated for cars that do not have a complete trip registration and for which a statement of no private use has not been requested. In case an employee owns more than one company car and uses only one car for private purposes, the new regulation below will not apply.

In the old regulation, the tax office looked at the catalogue value of the cars in question in cases where multiple company cars are also driven for private purposes. In those cases, the additional tax liability of the car(s) with the highest catalogue value was used. The car with the highest catalogue value is not necessarily the car with the highest additional tax liability.

The new regulation looks at the additional tax liability of each individual vehicle instead of only the catalogue value of the cars and the number of driving licenses in the employee’s household.

Employee’s family situation is important for new additional tax liability

On 1 January 2022, the additional tax liability that applies when more than one company car is used will not only depend on the tax liability that is added to the employee’s taxable income, but also on the family situation of the employee. If the employee is single or if he or she is the only person in the household with a driving licence, the additional tax liability is applied once. The employer then applies the additional tax liability of the car for which this is highest.

If more people in the employee’s household have a driving licence, the addition needs to be applied to the same number of cars as driving licences. Again, this rule only applies if no trip log is kept and/or no statement of private use is available.

Example

An employee has three company cars on 1 January 2022. The family consists of the employee and his partner, both with a driving license. No trip log is kept for any of the three cars. The employee’s payslip shows an additional tax liability for the two cars with the highest additional tax liability.

Further information

If you have any questions about the additional tax liability for one or more company vehicles, please contact your regular Joanknecht representative or one of the consultants in our team.



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