Addition, to add or not?

When an employee makes use in private of the company car which has been made available to him or her, this necessitates an addition being made to his or her (taxable) income which in principle amounts to 25% of the value of the car. The law assumes that a company car is made available for (a certain amount of) private use alongside business use. No addition to the employee’s taxable income is required as long as the employee ensures that no more than 500 kilometres per annum should be driven for private purposes. A mileage record is one way of ensuring that adequate proof should be on hand. No addition is required for vans that lend itself for goods transport only, for vans that are not available to be used outside working hours and for vans that are banned altogether from being used for private purposes.

A timepiece trader had a company car at his disposal. His employer had taken out a special insurance contract to ensure that the timepieces should continue to be insured even while they were located inside the car. The employer argued that the insurance terms made it compulsory for the trader also to use the car for private purposes, which should enable the addition for tax purposes being passed over whether or not the trader complied with the annual maximum of 500 kilometres. It is the purpose of a particular trip which dictates the nature thereof, in that a journey made for business-related purposes should qualify as a business trip whereas a journey made for private purposes should qualify as a private trip including where business-related considerations had been involved.

The Amsterdam Court of Appeal argued that the necessity or obligation to make private use of the company car did not constitute a reason for leaving out the addition to the (taxable) income. The mandatory car alarm and special insurance terms had not converted the (light) passenger vehicle’s status to that of a van, and even if the car could be put on a par with a van, there would still be no reason for leaving out the addition, the criterion in this respect being that the van due to its specific layout should be fit for goods transport only, the de facto use of a vehicle not being the deciding factor.