From January 1, company car trips from home to work will be regarded as private rather than business journeys. The vast majority of company cars are leased in the Netherlands.
On the surface the new system is very simple. Anyone who drives a company car will have to add 25% of the catalogue value of the car to his or her salary.
Depending on that salary, tax will claim a net maximum of 52% of the total. Those who can demonstrate that they do not drive more than 10,000km a year privately will not pay so much. Those who drive less than 500km privately will pay nothing. The tax authorities will require a precise record of trips taken, showing the exact number of kilometres driven per day, the purpose of the journey and the destination.
The authorities have been making the rules stricter over the past few years to increase their stranglehold on business drivers.
More than 40% of Dutch new car sales have gone into the leasing sector so far this year. For more than 10 years the government has imposed a maximum kilometre allowance for the business use of private cars - those who receive more than 60 cents per kilometre (e0.27) also pay tax on it. But the cancellation of this allowance means that the use of a private car for company purposes is no longer an attractive option.
This ruling has partly contributed to the lease market in the Netherlands being the most highly developed in the world.
The authorities are continuing to look at company car taxation - mainly to curb increasing congestion. They want to stop people taking unnecessary journeys to help clear the roads and cut vehicle emissions.
As a result, every company car driver must view the trip to and from work as private mileage from January. (November 2001)
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