When you're self-employed, every business decision impacts your finances, including how you use and classify your car. Choosing whether to register your car under your business or keep it private can bring tax benefits or added costs, so it's essential to understand which option best fits your situation.
Business Car or Private Car?
As a self-employed professional (ZZP'er), you're faced with an important decision: should you keep your car private or register it under your business? Each option comes with its own set of pros and cons, depending on your specific situation. Below, your ZZP accountant outlines the three main options and what they could mean for your business.
A New Car on the Business: The Pros and Cons
If you decide to purchase a new car and register it under your business, you can take advantage of various tax benefits, including:
- Deductions: Expenses like fuel, parking, repairs, and maintenance can be deducted from your profits.
- Depreciation: Your ZZP accountant will account for the car's depreciation in the profit and loss statement and balance sheet at the end of the financial year.
- Interest Costs: If you lease the car, the interest can be deducted from your profits.
However, there are also downsides, such as the bijtelling (additional taxable income). This is a percentage of the car's list price that is considered as income and is subject to tax if you drive more than 500 kilometers per year for personal use. The bijtelling rate is 22 percent of the car’s list price and is applied every year. Additionally, there is an annual VAT surcharge of 2.7 percent.
Registering Your Private Car Under the Business
If you already own a car privately, you can choose to register it under your business. This means the car becomes part of your business assets, allowing you to deduct expenses like fuel and maintenance as business costs. Generally, we advise only using a new car or a youngtimer (a car older than 15 years) for business purposes.
If you decide to make your car a "business" vehicle, you’ll also need to switch your insurance to a business policy and ensure the premiums are paid from your business account.
Keeping Your Car Private
If you choose to keep your car private, you can claim €0.23 per kilometer driven for business purposes as a deductible expense.
Best Option for the ZZP'er?
Ultimately, the choice is personal. Deciding whether or not to register your car under your business depends on:
- The number of business kilometers you drive annually.
- The amount of bijtelling you would need to pay.
- The yearly depreciation value you can claim.
- The costs of maintenance and repairs.
In general, we only recommend driving a new car or a youngtimer for business purposes. Find out if driving a company car is cost-effective.