A car of the business, or rather private? Buying, leasing or renting: when is which option the most advantageous? You can count for hours and come up with all sorts of complicated constructions that may save you a few ten euros per year. Remember, however, that you earn your money with actual business at a much higher rate than a few dozen per year.
Car: private or on the case
As a self-employed person you can choose to put the car in the name of the business or to keep it in private ownership. Both options have their advantages and disadvantages. Various factors play a role in the choice, such as catalog value and the number of kilometers driven.
The rule is that when buying a new car it is almost always cheaper to buy the car commercially. You then have an addition if you use the car private (> 500 km).
To make a choice, you must make an informed decision. You can not easily turn this back into a legal form as a sole proprietorship, VOF, partnership etc. Only in very special circumstances can the choice be reversed with the approval of the Inspector. For this you should submit a written request to the Inspector of the Tax Authorities in your region. With a BV it may be a consideration to take over the car privately from the BV after a few years. You must then send an invoice to you privately with real amount and the VAT that is processed from the BV to the tax authorities.
Having a company car (your own company) has the advantage that you can book all the costs of the car as business expenses. When purchasing a new car, the refund of VAT is a hefty item. But also fuel, insurance, maintenance, depreciation etc. are all deductible costs. If you drive more than 500 kilometers in a car of your company privately, you have to deal with the addition.
Addition for private car use
If you use your company car privately, you have a private advantage. Therefore, if you drive more than 500 kilometers privately, you will have to add a tax on your tax return and pay tax on it. The amount of the add-on may never exceed the total car costs including depreciation per year. The addition is calculated on the new value including accessories as stated on the registration of the car is on the registration document part 1. This amount includes BPM and VAT.
VAT payment on private car company
In addition to the addition for the income, VAT must also be charged for the private use of the car. There are two possibilities for this:
A – You pay VAT on the actual private use. To determine this private use, you must keep a correct mileage administration. Using this mileage administration you can then calculate the ratio between business use and private use. This is a difficult calculation and only interesting if you drive very few private kilometers in the car.
B – There is also the option to opt for a fixed percentage of 2.7% over the catalog value including BPM and VAT. You must state this in your VAT return for the last quarter of the year.
Car in private ownership that you use for business
If you use your private vehicle for the company, you can declare all business driven kilometers at your own company. To that end, you must keep a correct mileage registration that clearly shows which kilometers have been driven in business. You multiply the number of business driven mileage by 19 cents, transfer that amount from the company to your private account, or mark it out once a year against your other private recordings from the company.
If you calculate a mileage allowance to your customer, you will have to calculate VAT on your customer again and process this in your administration as well as other products or services you provide.