The Dutch tax system is designed to favour cars that are less damaging to the environment. Whether you buy a car privately or via your company, or you opt for a company car from your employer, the tax system provides incentives to choose an environmentally friendly vehicle.
These incentives include financial nudges on road tax, the addition of tax liability to your income, bypassing waiting lists for parking permits and extra deductions on the taxable profit of one’s company.
Buying an electric car in the Netherlands
Every car owner in the Netherlands is subject to road tax. The amount of tax due is based on different factors, such as the type of fuel, the car's weight, its CO2 emissions and the province in which the owner resides.
CO2-emission criteria & tax
Private ownership of a car is taxed according to these factors, unless the car meets certain CO2-emission criteria. If a vehicle (no matter how it is fueled) emits no more than 50 grams of CO2 per kilometre, the owner is exempt from road tax. However, should you be considering buying such a car, be aware that this exemption will be terminated in 2016.
Benefits of an electric car
The tax benefits for electric cars are far greater, especially in the capital city.
› Parking
By ordinance of the city council of Amsterdam, the owners of electric vehicles are eligible for a parking permit without being put on the waiting list.
› Charging stations
Further, the municipality of Amsterdam will subsidise the purchase and installation of charging stations. Every private charging station is granted 500 euros, which is bumped up to 1.000 euros if the charging station is installed in a location that is accessible to any electric car owner.
› Cost efficiency
Another advantage of an electric car is its cost efficiency. Based on current energy prices, every kilometre costs a mere 3 eurocents if the vehicle is charged at home or at the office. Also note that electric cars require less maintenance in comparison with petrol- or diesel-powered vehicles.
› Criteria for electric cars
Which cars fall under this category? Electric cars have to meet the following criteria:
- the vehicle must not emit any CO2
- it must have a range of at least 60 kilometres
- it must be able to exceed a speed of 75 km/h
Getting a company car in the Netherlands
When opting for a company car that is also available for private use, the tax authorities impose an additional tax liability on your yearly income. Your gross income (i.e. before taxation) will be increased by a certain percentage of the catalogue price of the company car, which for you results in a higher taxable income.
The percentage is determined by the CO2 emission of the company car and varies between 4 per cent (0 gr/km CO2) and 25 per cent (emission of more than 111 gr/km CO2 for diesel-powered cars and emission of more than 117 gr/km CO2 for petrol-powered cars).
Once the company car is registered in your name, the percentage addition to your income will be fixed for a period of 60 months, regardless of changes legislators make in the percentages of the addition.
Bringing a car from your country
As well as advantages like the deduction of VAT on the purchase of the vehicle, there is a possibility of an extra deduction on the taxable profit of your company.
What is MIA?
The tax authorities grant the owner of a environmentally friendly car an extra deduction, called the MIA. The MIA amounts to a certain percentage of the purchase price of the car, determined by its CO2 emission.
The percentages for the MIA in 2014 are as follows:
- 36 per cent of the value of the car to a maximum of 50.000 euros can be deducted from the taxable profit, if the car emits 0 gr/km CO2.
- 27 per cent with a maximum of 35.000 euros can be deducted if the car emits between 1 and 30 gr/km CO2.
- 13,5 per cent to a maximum of 12.500 euros can be deducted if the car emits beween 31 and 50 gr/km CO2.
Important note about VAMIL
VAMIL, the random depreciation of assets on the company balance, was terminated in 2013 and is no longer applicable.
More than pedal power
While cycling remains the most environmentally friendly and often the most convenient form of transport in the Netherlands, sometimes you really need a vehicle for professional and personal use.
An electric car is becoming an increasingly viable and cost-effective option. In fact, it could be more advantageous than you think!
Patricia van der Hut is a partner at Broadstreet, providing specialist tax and accountancy services to expats.