What do I need to find out for a business lease car? How do I choose the right type of lease? What will my tax addition (Dutch law) be? How do I benefit from tax advantages? How do I choose the right leasing company?
These are questions that come to mind when you plan to lease a car for business purposes. In recent years, in addition to business leasing, private leasing has also gained ground. This blog only focuses on business leasing in the Netherlands. It explains the pros and cons. In addition, you can read more about the different forms of leasing.
Business lease car: map out your wishes
The supply of lease cars has grown considerably in recent years. There is a wide range of lease cars and it is therefore hard to find the model that best fits your needs. It is also important to think about how long you want to conclude a lease contract. The usual contract period varies from 12 to 48 months, but also 60 months are possible.
Determine the right type of lease
There are a number of different forms of lease. The most common forms are financial lease, operational lease, short lease and occasional lease.
Financial lease (hire-purchase)
Car dealers offer a hire-purchase contract after which you are the owner of the car at the end of the term of the contract.
Operational lease
with this contract, companies offer their employees a business lease car. In case of an operational lease, the car remains the property of the lease company. In that case, this is a salary in kind whereby the amount for use of the lease car is added to the monthly salary. If you manage to stay under 500 km per year for driving for personal reasons, there are no additional taxes. If you also want to use the car for personal purposes or exceed the yearly 500 km, then you will have to pay an additional monthly car tax (this is also applicable for all the other lease types).
Short lease
Via short lease you can already lease a car for a short period of, for example, one or two months. This is useful when you temporarily need a car. For example, of temporary staff. The advantages are flexibility, no long-term obligations (often terminable daily) and little or no financial risks.
Used car lease
this form is nothing more than a car lease for a slightly older car. Often, these cars or company cars have previously been offered for lease and exchanged by a previous owner. The advantage of this is that you can take out a used car (often not older than three years), for a more attractive monthly rate and a short term. A disadvantage of this is that more maintenance may be required than with a new car and that there are traces of use.
The tax addition
If you drive more than 500 kilometres per calendar year privately in a company car, the employer is obliged to add an amount to your salary. The employer deducts payroll tax from the addition.
How do you benefit from the tax advantages?
If you drive a company car for business purposes, you must take into account the tax rules of the government. For example, you pay tax credits if you also use the car privately. The tax benefits depend on the type of car you drive. If it is an electric car, you can make use of a BPM exemption. A full electric car is subject to a lower additional tax rate of 8% instead of the standard rate of 22%. This rate applies to the first € 45,000, – of the list price. For the amount above that, you pay a rate of 22%. In 2021, the addition for new electric cars will increase to 12% over the first € 40,000. Another advantage of leasing an electric car is that you will also be exempt from motor vehicle tax until 2024.
Choose the right leasing company
It is always wise to compare leasing companies with each other, and that certainly applies to business leasing. There are always suppliers who make a better deal because there is constant change in the automotive market.
A long-term contract seems more advantageous, because you pay lower monthly costs, but it is still difficult to foresee the future. Do you really need this car for another four or five years? Always check the conditions to cancel the contract.
