KPMG Meijburg & Co, the Netherlands comments on changes regarding the benefits of having a company car.
This is contribution number 24 by KPMG Meijburg & Co regarding company car.
For employees having the benefit of a company car, the calculation of the taxable fringe benefit for tax purposes substantially depends on the distance between home and work. Employees who live more than 30 kilometres from their place of work the addition is 24 per cent of the new value of the car. For all others the addition equals 20 per cent. This distinction recently triggered a major discussion. The reason for this was a ruling by the Supreme Court of March 2, 1995 in which the Supreme Court indicated that the 24 per cent addition is perhaps discriminating and consequently not binding.
Based on this ruling, proceedings at the Court of Arnhem on the 24 per cent addition are now pending. The background is as follows: if a balanced kilometre administration is kept and private use of the car amounts to less than 1000 kilometres, the taxpayer will not be confronted with a fixed 20 or 24 per cent addition but rather with an addition based on the actual benefit of the private use. Consequently, the addition of the actual benefit is independent of the commuting distance. This in contrast with the situation in which one falls within the fictitious addition regulation: the commuting distance becomes decisive in fixing the addition at 20 or 24 per cent. The question now put to the Court is: Does the fact that commuting distance is decisive in one particular situation whereas it is irrelevant in the others make the distinction between 20 or 24 per cent unlawful in the sense that the addition has to be restricted to 20 per cent?
Senator Stevens recently asked Undersecretary Vermeend in this context whether the difference in treatment entails an unlawful unequal treatment and whether measures are required. Stevens also asked Vermeend whether he was prepared to promise that a Supreme Court decision in favour of taxpayers will be applied to all assessments which were not yet definitive on March 22, 1995. The Undersecretary announced that he intends to draft an instruction to all inspectors in which he will urge them to defer all decisions regarding appeals against the 24 per cent addition. Once the Courts have come to a final decision the appeals will be dealt with accordingly. It is therefore advisable to timely submit appeals against the application of the 24 per cent addition. This is also possible if you have declared the 24 per cent addition in your return.
This message is most likely to be relevant for employees having a company car.
Further information can be obtained from mr Alfred GM Groenen, MCL, KPMG Meijburg & Co, Amsterdam (Netherlands); fax 31 (20) 656 1247
Keywords: Netherlands / Dutch / Europe / EC / EU / European Union / KPMG Meijburg & Co / inward investments / MNE / fringe benefits / company car
Note: The content of this contribution is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
