16 November 2025 (updated 8 December 2025)
Company car in the Netherlands -- key information for entrepreneurs
Introduction
Entrepreneurs running a business in the Netherlands often consider purchasing a company vehicle. This article covers the benefits of owning a business car, available financing options, deductible expenses and tax obligations related to private use of the vehicle.
Why is a company car worthwhile?
Owning a company car offers a range of benefits for entrepreneurs:
- Vehicle-related expenses can be deducted as business costs
- VAT deduction on purchase, fuel, servicing and spare parts
- Access to tax incentives for certain types of vehicles
- Flexible financing options (purchase, operational lease, financial lease)
- Enhanced professional image for the business
- Better mobility when serving clients
Financing options for a company car
1. Purchasing a car
When purchasing, the entrepreneur becomes the full owner of the vehicle. You have complete freedom to sell the car, and depreciation and operating costs can be treated as business expenses. The downside is a high upfront cost and responsibility for financing servicing, insurance and road tax.
2. Operational lease
This is a popular financing method with a fixed monthly payment. Many contracts include servicing, tyres, insurance and road tax. The car remains the property of the leasing company, and the contract may include mileage restrictions. The entrepreneur bears no risk related to the residual value of the vehicle.
3. Financial lease
This is one of the most frequently chosen options in the Netherlands. A financial lease provides the possibility of acquiring ownership of the car. It allows you to benefit from the KIA (Kleinschaligheidsinvesteringsaftrek) investment deduction and apply vehicle depreciation. Lease instalments and interest are deductible as business expenses.
Company car costs
An entrepreneur can deduct the following expenses:
Operating costs:
- Fuel and electric vehicle charging
- Repairs, inspections and servicing
- Tyre replacement and spare parts
- Car wash and vehicle care
Financial costs:
- Operational lease instalments
- Financial lease interest
- Depreciation of a company-purchased car
Insurance and taxes:
- Mandatory third-party liability insurance (WA), comprehensive packages
- Motorrijtuigenbelasting (road tax)
- Environmental charges depending on vehicle type
Private use of a company car: bijtelling and BTW-correctie
The owner of a company car in the Netherlands may drive up to 500 km privately per year without having to pay bijtelling (private use addition). Once this limit is exceeded, two tax charges apply.
Bijtelling (private use addition) rates:
- 22% for petrol, diesel and plug-in hybrid cars
- 17% for electric vehicles up to EUR 30,000 catalogue value
- 22% for electric cars above EUR 30,000
- 35% for older vehicles (youngtimers)
BTW-correctie (VAT correction):
A VAT correction applies when a company car is used privately. The standard rate is 2.7% of the catalogue value; the lower rate of 1.5% applies to cars purchased without VAT deduction or those that have been in the business for at least 5 years.
For commercial vehicles, the entrepreneur can submit a declaration to the Belastingdienst confirming exclusive business use, thus avoiding the need to keep a mileage log.
BPM registration tax
From 2025, BPM (Belasting van Personenauto's en Motorrijwielen) for commercial vehicles is calculated based on CO2 emissions. For electric vehicles, BPM is 0, while for combustion-engine vehicles the rate is EUR 74.41 per gram of CO2/km. The special regulation for small entrepreneurs ceases to apply.
Tax incentives
- KIA (Kleinschaligheidsinvesteringsaftrek) -- investment deduction for small businesses
- MIA and Vamil -- incentives for environmentally friendly vehicles, including electric cars, allowing additional deductions
Summary
A company car in the Netherlands is an important element of business management that can bring tangible financial, tax and image benefits. The key is making an informed financing choice, accurately accounting for costs and taking into account obligations related to private use of the vehicle.