Dutch company-car tax starts with a figure called bijtelling: an amount added to taxable income because a business car is also available for private use. It is not the tax bill itself. An annual addition of €11,000 does not mean you automatically pay €11,000 in extra tax.
For a sole trader, the adjustment increases taxable business profit. For an employee, the employer processes the benefit through payroll. The basic calculation looks similar, but the treatment is not identical. This guide focuses on Dutch income tax for entrepreneurs and shows where the employee situation differs.
Start with the private-use question
If your car is treated as a business asset and you also drive it privately, a private-use adjustment normally applies. You can avoid the addition if you can demonstrate no more than 500 private kilometres on an annual basis. Exactly 500 is within the limit.
The limit is not a deduction from every driver’s private mileage. If you drive 900 private kilometres, you do not calculate tax only on the last 400. You move into the normal addition rules for the relevant period.
Before doing this calculation, establish whether the car is private or business property for Dutch income tax purposes. My guide to keeping a car private or in your Dutch business deals with that earlier choice. Paying an invoice through a business account does not by itself answer every tax question.
An employee should look at the employer’s arrangements and payroll records. A sole trader should look at the business accounts and income tax return. Using an employee calculator without checking what it assumes can produce the wrong comparison for a business owner.
The main rates for cars first registered in 2026
For a car with its first admission to the road in 2026, the ordinary addition is 22% of its relevant list value if it emits CO2. A regular fully electric car receives an 18% rate on the first €30,000, with 22% on the amount above that.
Take an electric car with a €50,000 list value. The calculation is 18% of €30,000, plus 22% of €20,000. That makes €5,400 plus €4,400, or €9,800 added to taxable income for a full year. Applying 18% to the entire €50,000 would understate it.
Certain qualifying hydrogen and integrated-solar cars have different treatment of the value limit. Those are specific exceptions. For a conventional battery-electric passenger car, include the €30,000 cap in your calculation.
A plug-in hybrid still has CO2 emissions. Driving some journeys on electricity does not automatically put it in the zero-emission category. Check the official vehicle details and first admission date instead of relying on a sales description.
A used car keeps its original list value
For an ordinary passenger car, the calculation generally uses the original list price including Dutch VAT and bpm, the vehicle registration tax. Relevant accessories fitted before registration may be included. The price you negotiate for a used car is not normally the tax base.
Suppose you buy a used car for €28,000. Its relevant original list value is €50,000, and its applicable rate is 22%. The annual addition is €11,000, not €6,160. The second figure comes from incorrectly applying 22% to your purchase price.
This explains why a discounted used car can still carry a substantial private-use adjustment. Depreciation has reduced its resale price without necessarily reducing the value used for bijtelling. Obtain the tax details before deciding that a bargain purchase also means a small tax cost.
The actual running costs matter too. Repairs, insurance, fuel or charging, finance and depreciation all affect affordability. In the true cost of owning a car, I explain how to put the purchase price alongside those continuing expenses.
Turn the addition into an estimated tax cost
Using the €11,000 addition above, an illustrative 40% tax effect would produce €4,400 extra tax a year, or about €367 a month. The 40% is a calculation assumption, not a Dutch tax rate that applies to everyone.
Your actual result depends on the income tax calculation, including tax brackets, credits and relevant business rules. A more useful estimate compares two complete calculations using the same personal figures: one without that addition and one with it.
Check what an advertised monthly figure includes. It may be a lease payment, estimated extra income tax or a package of several costs. Compare like with like before deciding which car is cheaper.
For an employee, an agreed contribution for private use can reduce the taxable benefit. Not every payment to an employer qualifies. Check the agreement and payroll treatment rather than importing that employee contribution into a sole trader’s calculation.
Entrepreneurs have a cap based on car costs
For a Dutch income tax entrepreneur, the private-use addition is capped at total relevant car costs, including depreciation. If the calculated addition is €11,000 but annual car costs are €8,200, the adjustment in this example is limited to €8,200.
The resulting net car deduction is zero. The business still paid the insurer and garage; the tax adjustment simply cancels the expense deduction. Cash spent and costs deductible after private-use adjustments are different figures.
If annual costs are €12,500 and the addition is €11,000, the simplified net deduction is €1,500. This is why a comparison should not treat every business car expense as a permanent tax saving. Work through the private-use adjustment before comparing business ownership with the private alternative.
Do not apply this entrepreneur’s cost cap to an employee benefit without checking the relevant payroll rules. A shared name for the car benefit does not make the two tax systems interchangeable.
Evidence matters at the 500-kilometre limit
A complete mileage log is a common way to demonstrate that private use stays within the limit. Record the car’s make, model, registration and period of use. For each journey, record the date, starting and ending odometer readings, departure and arrival addresses, and whether it was business or private.
Include unusual routes and private detours during otherwise business journeys. Driving from a client visit to a relative’s house does not make the detour business mileage simply because both journeys happened on a working day.
Commuting counts as business travel for this income tax test. VAT uses a different approach, so keep commuting identifiable in your records. Do not assume the same labels answer both tax questions.
The 500-kilometre test is annual. A car available for only part of the year requires an annualised assessment, and switching cars does not create another fresh 500-kilometre allowance. Check the periods and total private use before relying on the exception.
A second owner does not restart the electric discount
A reduced addition rate lasts for 60 months, beginning on the first day of the month after first admission. Buying the car used does not restart that period. The remaining months can be much more important than the attractive percentage shown in an advertisement.
For example, a car first admitted on 12 June 2021 starts that period on 1 July 2021. The 60 months end on 30 June 2026. After that, the rules then applicable determine the new calculation.
Ask for the exact first admission date, the current rate, its associated value limit and the end of the discount period. Model year alone does not give you those answers. Nor does the fact that the car is electric.
Older cars and VAT need their own checks
In 2026, cars older than 16 years use an addition of 35% of their market value rather than the original list value. Transitional treatment exists for cars already in use by the taxpayer in 2025 that were older than 15 on 31 December 2025. The familiar statement that every car over 15 qualifies is therefore no longer a reliable rule for a new purchase in 2026.
A separate VAT adjustment for private use may also be required. Staying within the income tax mileage limit does not automatically settle VAT. The guide to Dutch VAT on invoices explains the distinction between VAT and tax on business profit.
I provide Dutch tax advice for businesses, including the tax side of car decisions. Bring the list value, first admission date, expected annual costs and your business and private mileage. Those details allow a comparison based on how you will actually use the car.