The choice between purchasing a car for business use or privately is an important financial decision for both entrepreneurs and individuals. Each option comes with its own advantages and disadvantages, and it is essential to understand these clearly to make an informed decision. In this article, we discuss the tax aspects such as bijtelling and the youngtimer/oldtimer regulations, and outline the pros and cons of both options.

Private Car

When you choose to purchase a car privately, there are several tax considerations and benefits to keep in mind. If you use a private car for business trips, you can reimburse yourself with a mileage allowance. This allowance amounts to €0.23 per kilometer in 2024. This reimbursement is intended to cover fuel costs, maintenance, and depreciation.

Car Through the Business

When you, as an entrepreneur, purchase a car through your business, you can benefit from several tax advantages. All car-related expenses can be deducted as business costs. However, note that you must pay two types of bijtelling. These are explained below.

• Fuel costs: All fuel expenses can be charged to the business.
• Maintenance and repairs: Costs for maintenance and repairs are deductible.
• Insurance and taxes: Insurance premiums and road tax can be listed as business expenses.
• Depreciation: The car can be depreciated over a period of five years, reducing profit and therefore lowering the tax burden.
• Lease costs: If you lease a car, the full lease amount is deductible.
• Parking and toll costs: Parking and toll charges are also deductible as business expenses.

Bijtelling for Company Cars

When you use a company car for private purposes, bijtelling applies. This is a tax measure where a percentage of the car’s catalog value is added to your taxable income. This is then taxed under Box 1 (income from work/home). The bijtelling is calculated based on the car's catalog value and type (electric, hybrid, petrol, diesel). You can calculate this easily online.

Do you drive fewer than 500 private kilometers per year? Then you can apply for an exemption from bijtelling. You must prove this with a complete and accurate mileage log.

Bijtelling and Kilometer Tracking

VAT Correction with Mileage Log:

If you keep a detailed mileage log, you can determine exactly how many kilometers are business-related and how many are private. This log is essential to calculate the VAT correction for the private use of a company car.

Example:

You drive 40,000 km annually, of which 10,000 are private. This means 25% of your total mileage is private. You must then repay 25% of the VAT you reclaimed on car expenses—such as maintenance, fuel, repairs, and accessories—back to the Tax Authorities. This method ensures you only pay VAT on actual private use.

VAT Forfait Without Mileage Log:

If you do not keep a complete mileage log, the VAT correction is based on a fixed percentage. In this case, you must pay 2.7% of the car’s catalog value (including VAT and BPM). This percentage also applies to operational/financial lease cars and youngtimers.

For margin cars, meaning cars for which you did not deduct VAT at purchase, a lower rate of 1.5% applies. This means you pay 1.5% of the catalog value annually as a VAT correction.

Youngtimer & Oldtimer Regulations

For cars older than 15 years, the "youngtimer" rule applies. The bijtelling is calculated not on the catalog value but on the current market value, which can be significantly lower. This is particularly beneficial for cars that have significantly depreciated.

With the Oldtimer regulation (40 years old), you may receive an additional BPM exemption upon purchase.

Pros & Cons: Business Car

Advantages:

• Deductible costs: Fuel, maintenance, insurance, and depreciation are tax-deductible.
• No private investment: No large personal financial outlay needed for purchase.
• Liquidity: You keep more private cash flow.
• VAT benefit: VAT on business car expenses is deductible if the car is used at least 10% for business.

Disadvantages:

• Bijtelling: Can significantly increase your taxable income.
• Administrative burden: You must keep a full mileage log to prove private use under 500 km.
• Limited private use: You must be careful not to exceed the 500 km limit.

Pros & Cons: Private Car

Advantages:

• No bijtelling: No additional taxable income.
• Full freedom: No limits on private driving.
• No business administration: No need for mileage tracking.

Disadvantages:

• No tax deductions: Fuel, maintenance, and insurance are not deductible.
• No VAT benefit: You cannot reclaim VAT on purchases or expenses.
• Full cost burden: All car costs come from private funds.

What Is Most Beneficial?

Whether a business car or private car is more advantageous depends on your personal and business situation:

• Do you use the car mostly for business and very little privately?
  A business car can be beneficial—especially if you avoid bijtelling.
• Do you want to own the car personally but use it often for both business and private purposes?
  A private car with mileage allowance may be cheaper.
• Do you want maximum freedom without administrative headaches?

Private ownership is usually more attractive.