For years it was the most natural thing in the world. Did you have a position where you didn’t work full-time in one place? Then a company car had to come. For managers and up-and-coming talent, it was even the means to get them to choose your company. Nothing was too crazy. If one company only gave you the choice of one or a few brands, the other company made a budget available for you to go shopping. Anything was possible, as long as it wasn’t too conspicuous. And of course the car was no bigger than the director’s car! But times change. Covid-19 and new tax rules provide a different view of the business car.
Consequences of Covid-19
The past two years have shown that working from home is a real way of working. Before Covid-19, many companies were still skeptical about working from home. Is there serious work, how can I check this. ‘Forced’ by Covid-19 has shown that working from home is very doable for many functions. Working from home has reduced the number of business kilometers driven. This is sufficient reason for companies to look for alternatives that better meet the current transport needs. Some opt for a ‘mobility budget’. A budget, to be spent freely by the employee. He can then opt for a private lease car, but also, for example, for an annual public transport card. Others opt for a minimum limit on the business kilometers to be driven. Anyone who drives more than 30,000 km per year for business purposes is entitled to a lease car. However, some companies are very clear about the company car: whoever has to drive will find a solution for it themselves!
Less attractive from a tax point of view
A lease car sounds attractive but costs serious money due to the changed tax addition rules. Petrol and diesel cars and hybrid powered cars will have an addition of 22% in 2022. For electric cars, the addition will be 16% in 2022, up to the threshold amount of € 35,000. Above that threshold value, 22% addition applies. What does that mean in net amounts? Below are two calculation examples.
Example net addition of petrol, diesel or hybrid car
Suppose you lease a car with a petrol engine with a list value of € 35,000. The addition will then be € 35,000 x 22% = € 7,700. If you fall within the lowest tax rate of 37.07%, you pay €2,854 extra tax per year.
Example net addition of electric car
Suppose you lease a new electric car with a catalog value of € 50,000, then you charge a 16% addition on the first € 35,000. That’s €5,600. On the amount above the threshold value – € 15,000 in this case – you charge 22% addition, or € 3,300. In total you add € 8,900. If you fall within the lowest tax rate of 37.07%, you even pay € 3,299 extra tax per year.
Also less interesting for the employee himself
Suppose your boss allows you to lease the above electric car with a value of € 50,000.00. The calculation above indicates that you will then pay net € 3,299 in extra tax per year. Assume an average term of the lease contract of 4 years, and you will tap over € 13,000.00 over those four years. After four years you hand in the car, you have lost the money and there is nothing left. If you drive a lot of kilometers then this kite will of course not go up, then the car really has its added value. But if you look at how many employees have been working from home in the recent period of Covid-19, the company car does not make its miles for many of these people. Then it is hard money for a car that only stands still.
Employers invest in working from home
Employers are also aware of the cost savings that working from home can bring. There is no longer a need for a workplace for every employee, extra buildings that were previously needed are now superfluous. Microsoft Teams is a solution for every form of meeting. It is therefore expected that working from home will be here to stay. Even after the Corona, many companies will opt for at least partly working from home. In addition, companies are actively investing in other forms of transport, such as the lease bicycle. All these measures ultimately result in far fewer travel movements by car. Fewer travel movements means fewer kilometers driven by car and therefore has a direct effect on the need for a company car. This development will also be reflected in the number of lease contracts in 2021.
We will see for ourselves how the company car will eventually develop when Covid-19 is out of the world. Large companies will probably set an example here for the smaller companies, which will follow later. But the period in which a company car is the most natural thing in the world, that is behind us.
Has the company car seen better days?
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