Is driving for business more advantageous for a self-employed person?
Unless you need a van for your work, as a starting self-employed person you usually use your private car for business trips. You can then claim € 0.19 per business kilometre as business expenses. Usually, this rule is fine during the start-up phase of your company. But when your company grows or you need a new car or van, you will have to decide whether driving for business purposes is more interesting for you. Also take into account your insurances.
Additional tax on business travel
If you register a car in your company name, you can deduct all costs of that car, including depreciation, fuel, car wash receipts and maintenance. However, you should take into account that there is an addition for the private use of your car, unless you drive less than 500 kilometres per year. This addition amounts to a percentage (depending on the CO2 emission 4% or 22%) of the catalogue value of the car. The amount of the addition is added to your income as a self-employed person. On this you pay income tax. If you drive a car of 15 years or older, you can make use of the Youngtimer scheme. You then only pay an addition on the daily value of the car. That makes a big difference!
Lower premium for commercial vehicle insurance
An additional advantage of a company car is that its insurance is also cheaper. Because the company car can be insured excluding VAT. This reduces the amount to be insured and therefore also your premium! For a car with a grey license plate it is obligatory to take out a company car insurance. It does not matter whether or not the car is registered in the name of your company. At online insurance specialist Cheapp.nl you can get all kinds of company car insurances at a very favourable price:
- Business car insurance: for business passenger transport
- Van insurance: for goods transport
- Truck insurance: from 3500 kilograms weight and load capacity
- Fleet insurance: as from 10 company vehicles
All these insurances can also be taken out for leased vehicles.
Deducting VAT for private car
If the car you use for business purposes is private property, you cannot deduct the VAT when you buy it. The VAT on maintenance, repair and running costs can be deducted, but obviously only for business use. Keep a good kilometre record for this. The amount you can claim back is the ratio between the number of business kilometres and the number of kilometres driven on an annual basis.
What is more advantageous; business or private driving?
Every self-employed person is different and what is more advantageous therefore depends very much on your situation. You can ask yourself three questions that will determine what the best choice is for you:
- Do you need a car or a van for your work?
- How many kilometres do you drive for business and private use?
- Are the total costs of the car higher or lower than the additional charge?
Discuss these questions with your accountant to find out what is most advantageous for you: a company car or not?
Adjust your insurance
If you switch from a private car to a company car, don't forget to adjust your insurance. Alpina.nl insures both business and private vehicles and always helps you with the switch. You quickly calculate the premium you will pay online. Alpina.nl compares all Dutch insurance companies. Moreover, you can choose additional coverages. Want to know more about business vehicle insurance? Or would you like to know which other business insurances are applicable for your company?
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