Online marketer
04 January 2024
In this blog we will delve deeper into what additional taxation exactly entails, why you pay additional taxation, changes in the established additional taxation percentages, and how the additional taxation will be calculated in 2024. Discover what awaits you in the new year.
Additional tax is a tax levied on the private use of a company car. When an employer makes a car available to an employee, this is considered a form of payment in kind. The employee benefits from the advantage of private use of the car. In order to tax this advantage, additional tax is applied. The idea behind additional tax is that the employee pays tax on the advantage he or she has by being able to use the employer's car for private purposes.
The tax authorities automatically assume that you will also use the vehicle privately. Is this not the case? Then you can choose to sign a 'declaration of no private use'. In that case, you may drive the vehicle privately for a maximum of 500 kilometers and it is important to keep an accurate journey log.
The amount of the additional tax depends on various factors, including the catalogue value of the vehicle, the CO2 emissions, the year of manufacture and the additional tax percentage. The additional tax percentage is determined annually by the government and can vary depending on the environmental friendliness of the car.
As mentioned above, the additional tax percentages and limits are not fixed, but change annually to reflect the government’s environmental considerations and economic goals. Typically, additional tax percentages apply for a period of 60 months. This means that if you purchase a new car in 2024, the additional tax rates that apply at that time will apply to that car for 60 months. After these 60 months, the additional tax percentage depends on the rate applicable in that year.
As mentioned earlier, the gross additional benefit is calculated based on the catalogue price of the car (the new price including factory options, bpm and VAT), the additional benefit percentage, the CO2 emissions and the year of manufacture. The following rules apply in 2024:
Suppose that you as an employee have been provided with a new electric car (2024) by your employer, which you will also drive privately. The catalogue value of this electric car is €40,000 and the CO2 emissions are 0, because it is a fully electric car. The following calculation applies to the gross additional benefit:
30.000 * 0,16 = €4.800
10.000 * 0,22 = €2.200
€4,800 + €2,200 = €7,000 per year
€7,000 / 12 = €583.33 per month
The gross addition is added to your income and taxed according to the tax bracket that applies to you. The net addition is then your income tax rate times the gross addition.
Suppose that you as an employee have been provided with a new petrol car (2024) by your employer, which you will also drive privately. The catalogue value of this petrol car is €40,000 and the CO2 emissions are more than 1 gram. The following calculation applies to the gross additional benefit:
€40,000 * 0.22 = €8,800 per year
€8,800 / 12 = €733.33 per month
The gross addition is added to your income and taxed according to the tax bracket that applies to you. The net addition is then your income tax rate times the gross addition.
In this blog we have explained what additional tax means exactly, why you pay it, the rules that apply in 2024 and how the additional tax is calculated. Additional tax is the tax levied on the private use of a company car and is based on various factors, including the catalogue value, the CO2 emissions, the additional tax percentage and the year of manufacture of the car. We have also provided some example calculations to show how the gross additional tax can be calculated for different types of cars and situations. Make sure that you are well informed about the additional tax and the applicable rates every year and avoid financial surprises.
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