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Written by:
Bas Hollenberg


Additional tax rate discrepancies deemed permissible

The benefit which an employer obtains owing to his being permitted to make private use of his company car represents wages in kind. The benefit is fixed at a percentage of the listed value of the vehicle in question, with the employee’s wage being augmented accordingly. The level of the rate depends on the carbon dioxide emission rating of the vehicle. The Supreme Court recently ruled that the additional tax differentiation could not be regarded as coming under the category of impermissible discriminatory treatment as it was objectively justifiable.

The Supreme Court arrived at its ruling in a case involving an employee mounting a multiple challenge to the tax office’s addition in connection with his private use of his company car, one of his arguments being that it should no longer be permissible for the legislator in the wake of the latter having delegated the authority to come up with more detailed regulations to exercise the authority it had previously delegated. The Supreme Court dismissed this view, stating that it was altogether possible for the formal legislator itself to exercise a devolved regulatory competence without the devolutory stipulation in question first having to be rescinded or an express reservation having to be made.

The employee moreover contended that the discrepancies between additional tax rates were an example of discriminatory treatment, as the company car’s efficiency (or lack thereof) made no difference where the vehicle’s use for private purposes was concerned. The Supreme Court, however, decided that the notion of encouraging the use of less environmen­tally unfriendly motor cars constituted an objective and reasonable justification of the difference in (tax) treatment.

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