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Tax rules full electric cars will change as of the year 2019

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The tax rules for full electric cars will change as of the year 2019. It can still be very interesting to get a full electric company car before the end of 2018 in order to avoid the “Tesla tax”. In the below we give an overview of the current company car tax system as well as the changes for the coming years.

Bijtelling / adding benefit company car to salary
Having the benefit of a company car is seen as an income (“bijteling”), unless you drive it less than 500 kilometers per year for private use and you keep an administration of these kilometers.

When you buy a full electric car (only applicable when zero emission) car in 2018, you will fall under the 4% “bijtelling” (added taxable salary because of the benefit of driving a company car). This bijtelling is calculated over the gross catalogue value of the car, so when the catalogue value is EUR 40,000, the bijtelling is 4% x EUR 40,000 = EUR 1,600 which amount is added to your salary and taxed at the applicable progressive rate. So if the top of your salary falls in the 42% rate, the payable wage tax on the company car is EUR 1,600 x 42% = EUR 672.

This 4% bijtelling will remain applicable for 5 years as of the moment the car is first registered. Also when the car is sold so someone else this five year period (as started as of registration first owner) will remain. After those five years (so at the latest at the end of 2023) the bijtelling rate will go to 22%.

If you buy a full electric car in 2019 or 2020 the rules are different, still 4% bijtelling applies as long as the catalogue value of the car is below EUR 50,000. When the catalogue is higher than EUR 50,000, the excess will get a bijtelling of 22% (unless the fuel is water based). Also referred to as the Tesla-tax. So if the catalogue value is EUR 70,000, the first EUR 50,000 will have a bijtelling of 4% the remainder (EUR 20,000) will have a bijtelling of 22%. So it will be a mix of rates. As of 2021 the bijtelling rate will be 22% on all electric cars.

Corporate income tax
There is also a tax incentive for full electric cars for corporate income tax purposes. In 2018 there is an (environmental) deduction of 36% over the catalogue value till EUR 50,000 (only when the car is bought new), if the car is more expensive than on the excess the 36% deduction does not apply. It is obigatory to request this incentive by registering at the “RVO” agency within three months (after signing the purchase agreement with the car dealer) in order to obtain this incentive.

VAT
As far as the VAT refund, this is also applicable for non-electric cars, you can get a full refund of VAT when the car is bought (or financial lease) by the company. Also VAT on running costs can be deducted, however VAT has to be paid on private use, if no records of the private use is kept, you should pay a deemed VAT amount on annual basis, being 2,7% over the catalogue value.

Road tax
Till 2021 no road tax for full electric cars, as of 2021 the normal road tax applies also on full electric cars.

Company owner with company car
In general company cars will become less attractive for tax purposes after 5 years, because there will be no more depreciation and the bijtelling in this case will increase considerably. So best to take it out of your company after five years. If the car has been fully depreciated in those five years, the gain on the sale is profit for your company. But you can take the market value which after five years may be limited at that time especially given the uncertain market for electric cars.

Please note that this is the (suggested) legislation as per 2018, rules may well change the coming years since as it stands now in a few years time the electrical will have the same tax treatment as regular fuelled cars, which may lead to electrical cars becoming far less interesting whilst the environmental rules the Netherlands has to meet are strict and becoming stricter for the coming years. So there may well be further more interesting change of the above legislation the coming years.

If you have any questions, or a concrete vehicle you wish to purchase, please contact us and we can advise further on the above.

Proof may not be reversed without invitation letter

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The Dutch tax authorities may not reverse the burden of proof if an invitation to file a personal income tax return (aangiftebrief) has not been sent them first.

Recently, Tax Court issued a judgment in a case in which the tax authorities wanted to reverse the burden of proof after imposing an ex officio estimated income tax assessment.

The taxpayer in this case had not filed a tax return and also had not received an income tax return invitation from the tax authorities. The inspector made an ex officio estimated tax assessment and took the view that the burden of proof was on the taxpayer to refute the amounts of the ex officio tax assessment.

The Court saw sufficient reason to submit the burden of proof – of the estimated amounts of the ex officio assessment – to the tax authorities because the taxpayer did not submit an (incorrect) declaration and had not received an invitation to file a tax return. At least the inspector could not provide evidence that such an invitation had indeed been sent to the taxpayer, although the inspector was convinced that it was.

Incidentally, the inspector in this case still had the chance to successfully defend the height of his ex officio attack so that this estimated tax assessment was maintained.

Perhaps the Tax Authorities will try to prevent a similar future case as much as possible by sending many taxpayers an invitation to file a tax return.

7.9 million people were invited over the tax year 2017, including persons who would not actually have to file a declaration, making the invitation in such cases more like an unauthorized ‘fishing expedition’.

The law hereby imposes the following restriction on the inspector: “Pursuant to Article 6 paragraph 1 AWR, the inspector … can invite the person who, in his opinion, is presumed to be liable to pay tax or is liable to pay deductions.” So there must be a suspicion before an invitation can be send.

In view of the formalities and the impact of such an invitation, it should only be issued in evident situations: “anyone who has been invited to prepare a tax return is required to make a declaration by means of the information requested in the invitation, clearly, firmly and without reservation….”

With or without tax return invitation letter (aangiftebrief) we can be of service to you when drawing up your personal income tax return.

Stamrecht payments are no annuities under Dutch tax treaties

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Dutch Supreme Court has ruled that standing right (stamrecht)  annuities – following from severance payments – do not comply with the annuity definition in tax treaties that the Netherlands has concluded.

Previously, taxpayers with an annuity were entitled to an exemption from deduction of wage tax on their annuity, because the annuity met the conditions of the definition of the term annuity in the tax treaties. The Supreme Court now states that the employment history of the severance payment from which the annuity has arisen must be examined. In these cases, this means that both the severance payment from the past and the subsequent annuity payment are qualified as income from work.

This means that the annuity – as a result of severance payments – paid abroad by the Dutch entities are regarded as earned income. Despite the tax treaties concluded by the Netherlands, these revenues are taxed in the Netherlands. If an annuity results from a severance payment of an employment in the Netherlands, it in principle is taxable in the Netherlands. If part of the initial severance payment can be contributed to an employment outside the Netherlands a partial exemption may be allowed.

Only if an annuity payment is intended as a pension for the bridging period until the pensionable age can it be qualified as a pension benefit. The employee and employer must have agreed this at the termination of the employment.

The tax exemption remains in force for the year 2017, but from 1 January 2018, these annuities are taxable in the Netherlands. The exemptions granted in the past are withdrawn from 1 January 2018.

Fill in a tax return over the year of migration and – in most cases – receive a tax refund!

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In most cases a tax and premium benefit can be achieved in the year of migration, either moving to or moving out of the Netherlands. As to the premiums this benefit follows from the fact that premium can be calculated on a time related basis.

This in practice means that per month no more premium can be due than 1/12 of the maximum annual premium. When the taxable income on annual basis is higher than appr. EUR 34,000, this time related method may well offer a benefit.

As to the tax part; employers calculate the wage tax due on annual basis and divide the outcome over 12 months. … Read More

“I am not a tourist fair” 2014

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Newcomers who are still finding their feet, will have the chance to learn about setting up a bank account, doing their taxes, and finding a school or university. Both newcomers and veteran expats can enjoy these resources along with entertainment and a wealth of information on cultural pursuits for internationals who want to dive into Dutch culture and enjoy the differences! Discover yummy Dutch food and beverages (yes, they do exist!), entertainment and networking opportunities. We will be present and hope to see you there! Join us on Sunday, 2 November 2014 at the Beurs van Berlage in Amsterdam. We will offer a special Fair discount on all our services for those who attend and leave their emailaddress. … Read More

Dutch personal income tax rates 2013 and 2014

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Rates box 1 (income from work and home ownership)

Tax year 2014

Taxable income of
more than: but less than: tax rate: premium: total rate: total tax/premium:
(younger than variable pension AOW age)
EURO 0 to EURO 19,645 | 5.1% | 31.15% | 36.25% | EURO 7,121
EURO 19,645 to EURO 33,363 |10.85% | 31.15% | 42% | EURO 12,882
EURO 33,363 to EURO 56,531 |42.00% | 0% | 42.00% | EURO 22,612
EURO 56,531 and further |52.00% | 0% | 52.00% | EURO 22,612 + 52% on excess

Taxable income of
more than: but less than: tax rate: premium: total rate: total tax/premium:
(65 years and older)
EURO – | EURO 19,645 | 5.1% | 31.15% | 36.25% | EURO 7,121
EURO 19,645 | EURO 33,363 |10.85% | 31.15% | 42% | EURO 12,882
EURO 33,363 | EURO 56,531 |42.00% | 0% | 42.00% | EURO 22,612
EURO 56,531 | and further |52.00% | 0% | 52.00% | EURO 22,612 + 52% on excess

… Read More