Private Use of a Business Car vs. Business Trips with a Private Vehicle

# Choosing a Car Classification for Tax Purposes

Entrepreneurs often need a vehicle for their activities — to visit clients, deliver goods, or simply commute from home to their business.

If you want to purchase a car directly under your ZZP, you should know that legally you are buying in your own name, since a sole proprietor does not have its own legal personality. However, for tax and accounting purposes, you can classify the car as either a business or private vehicle, based on your needs.

Importantly, different rules apply for income tax and VAT, and you can make a separate choice in your income tax return (e.g., car in private assets) and your VAT return (e.g., for business use).

There are certain conditions under which the choice is made automatically — if the car is used for business purposes more than 90% of the time, or if private trips are fewer than 500 km per year, the car is considered a business vehicle. In other cases, you can choose the classification that fits your goals and circumstances (keuzevermogen).

The classification for income tax is recorded at the time of filing the first income tax return where the car appears as an asset or expense source. Changing the classification later is not possible, except in special cases (e.g., a fundamental change in usage or sale of the car). For VAT (BTW), the classification procedure is different: it is recorded in the BTW-aangifte, can change annually, based on actual usage.

With mixed use, it is especially important to keep a mileage/trip log, which will help you prove to the tax authority how many kilometers per year you drive in total and how many of those are for private purposes. Therefore, the tax authority strongly recommends keeping a registration table with detailed data per trip about mileage and purpose.

# Tax Features of a Business Car

The biggest advantage of a business car is the ability to claim tax deductions. For example, you can deduct from profit (excluding VAT):

• fuel costs,
• maintenance,
• parking and road tolls,
• insurance,
• depreciation,
• taxes and fees,
• leasing or financing, etc.

which reduces your taxable base.

Some of these costs can only be deducted proportionally to the business use, which you know if you keep a trip log.

In the VAT return for a business car, you can reclaim VAT on the purchase, maintenance, and fuel proportional to the percentage of business use related to taxable activities. Commuting is considered private use here, so it is not reimbursed.

At the same time, you must pay VAT on private use of the business car in the last quarterly or annual VAT return. With accurate mileage records — proportional to the percentage of private use. Without accurate records — a standard rate of 2.7% of the car's list price (including VAT and BPM) applies. If the car is older than 4 years — the rate is 1.5%.

If you drive more than 500 kilometers per year for private purposes in your business car, you will have to deal with an additional tax amount (bijtelling). Bijtelling is a deemed income added to your profit and taxed as regular profit. It depends on the car's value, CO2 emissions, and first registration date. As of 2025, for fossil-fuel vehicles registered after 2020, this rate is 22% of the list price. For cars older than 15 years — 35% of market value, not list price. The bijtelling amount also cannot exceed the car expenses you are entitled to deduct from profit.

# Tax Features of a Private Car Used for Business

If the car is registered as private property, there are certain particularities when using it for business:

• there is no bijtelling for private use.
• you must keep a log of business mileage.
• VAT (BTW) can only be reclaimed on work-related expenses associated with the car (e.g., fuel for business trips). VAT on private kilometers is not reimbursed; commuting is considered private use for VAT purposes.
• If you do not keep records showing how much the car is used privately, you can reclaim all VAT on fuel, repairs, and other costs. But at the end of the year, you must make a correction — that is, return a portion of the VAT for private use. For this, you report 1.5% of the car's list value (including VAT and BPM) as VAT to be paid.
• you can deduct €0.23 per business kilometer as expenses in your income tax return (commuting is considered business mileage for income tax purposes). This amount reduces taxable profit as a regular expense.