• Undependable Kilometer Log Leads To Additional Tax Assessments
  • November 15, 2010 | Authors: Patrick Rietbroek; Eugene Weultjes
  • Law Firm: Greenberg Traurig, LLP - Amsterdam Office
  • If an employer provides his employee with a company car that can also be used for private purposes, a taxable inclusion should be taken into account if the car is used for more than 500 private kilometers per year. The taxable benefit is a maximum of 25% of the car’s list price for the whole year. When a kilometer log shows that car is used for less than 500 private kilometers per calendar year, the inclusion is reduced to nil.

    To prove that the company care is used for less than 500 private kilometers per calendar year the employee has to present a correct kilometer log at the end of the calendar year. If the employee submits an inaccurate or incomplete kilometer log, the tax authorities will impose additional wage tax assessments. The employer is safeguarded from any additional wage tax assessments if the employee received a "statement of no private use of company car” from the tax authorities. In this situation, the additional tax assessment will be imposed on the employee.

    In a case before the Court of Appeal in Arnhem, an employee received a company car from employer A from January 1, 2006 to November 17, 2006. From mid-November of 2006, the employee was employed by employer B and used different company cars. The employee maintained a kilometer log. On October 15, 2006, and on March 4, 2007, the car was seen on the road while the kilometer log did not show any trips on these days. Because of incomplete logs, the inspector imposed additional wage tax assessments (including penalties) over the years 2006 and 2007.

    In dispute was whether the tax inspector imposed the additional wage tax assessments (including penalties) correctly.

    Following a ruling of the Court Arnhem, the Court of Appeal in Arnhem decided that the tax authorities imposed the additional tax assessment correctly. The kilometer log was not complete because trips destinations for various dates were missing. Furthermore, the addresses and names of the business contacts were missing in the kilometer log. The fact that the employee can show the visited addresses and / or business contacts from his agenda did not dispose the decision of the Court of Appeal.