Private lease or company car

Private lease or company car are two different things, but both forms of leasing have some similarities. If you find yourself in a situation where you can opt for both lease types, it is good to know which suits you better: private lease or business lease.

private lease

With a private lease, the car you drive is considered property, even if you do not technically own it. After all, the car belongs to the leasing company, but it will be in your name. This means that you have to pay road tax. The amount is included in the monthly lease price that you pay. This also includes insurance, maintenance of the car and any breakdown assistance. With private lease there is therefore no tax addition. You do have to pay the fuel, parking costs, fines and other variable expenses.

If you want to lease a car privately, you can determine together with the leasing company how many kilometers you want to drive per year and for how many years you want to drive the car. It is important to know that a private lease contract is registered with the Credit Registration Bureau (BKR), which can reduce your borrowing capacity. This can have consequences for when you want to take out a mortgage. Private lease is especially interesting for people who want to drive a new car, but do not have the savings (or want to spend) to buy their own car.

Business leasing

Of course you can also choose between a private lease or a company car. This involves wages in kind: the car belongs to the company for which you work and lends it to you, for example to drive to appointments and to go home from the office and vice versa. Unlike private leasing, business leasing is not seen as property, but as income. The result is that you will have to deal with a tax addition if you travel more than 500 kilometers for private use. This is a fixed amount that is determined on the basis of the list price, the CO2 emissions and the year of manufacture of the car. The normal rate is 22 percent, for electric and hydrogen cars a reduced rate of 12 percent applies (for electric cars up to 40,000 euros in 2021). This amount is added to your income, so you have to pay more income tax. You will find the Addition Calculator on this site for this.

If you run your own business, business leasing is an option. In this case you will have to deal with the advantages compared to private lease in a more direct way. For example, you can deduct all costs incurred with/for the car from the profit, because these are seen as operating costs. The car is therefore not registered in your personal title, but in the name of your company. Just like with a private lease, when leasing a business car, you have a fixed monthly amount. This includes most costs such as insurance and roadside assistance. You can also take a fuel card with a business lease car.

Private lease as an independent entrepreneur

It is explained above that you can drive a company car if you have your own company, but private lease is also an option for independent entrepreneurs. In this case, the car will be in your personal title and not in the name of the company. This way you avoid the tax addition and the usual rules of private lease apply. You can declare the business kilometers that you make with your private lease car for 0.19 euros per kilometre. This makes private lease an interesting alternative for independent entrepreneurs. One downside is that you can’t deduct the VAT because it’s technically a private car.

In addition, you can apply for a subsidy when buying or leasing an electric car (as long as stocks last, that is) that can make the overall picture even more attractive!