Which costs are deductible as an entrepreneur with a lease car?

30 september 2021

Do you spend a lot of time in the car on the way to customers or company visits? A car is indispensable for many entrepreneurs. You can choose to buy a car, but leasing is also popular these days. Financial lease in particular is often chosen, because that way you as an entrepreneur will have to deal with many tax benefits. You can read about the benefits below.

financial lease

When leasing a car on the basis of a financial lease , you are the direct owner, economically speaking. This means that the car will appear on your company's balance sheet. This makes some costs tax deductible. This is one of the reasons why a financial lease is a popular lease form among entrepreneurs.

1. VAT refund

If your company is subject to VAT, you may reclaim the VAT if you lease a car on the basis of a financial lease. You can choose to submit this declaration monthly or quarterly. That means that it also depends on when you get the amount back. In addition, you can choose to reclaim the VAT in one go with the next tax return, so that the VAT is settled in one go. That saves a lot of costs.

2. Interest Deduction

In fact, a financial lease is a business loan in the form of an annuity. So you have to pay interest for this. It also means that you can deduct the interest you pay on the lease amount each year from the profit that you have made within your company. You can use an amortization schedule to determine the amount of interest. This schedule gives you insight into how much interest you have to pay each month, and you can then calculate how much interest you can deduct in the tax return.

3. Investment deduction

When you invest in business assets as a company, you are entitled to the investment deduction. Thanks to this deduction, the profit is lower, so that you reduce the business tax. The investment deduction is divided over three types of schemes, which you can use as an entrepreneur. These are the small-scale investment deduction, energy investment deduction and the environmental investment deduction. However, it is not possible to benefit from both the energy investment deduction and the environmental investment deduction.

4. Depreciation

If you as an entrepreneur financially lease a car, you may write off the costs. It is seen as a business asset. The costs that you may depreciate are calculated as follows: divide the costs over the number of years that the car has been used and you may deduct twenty percent from this tax. By deducting these costs from the profit, you pay less tax.

There are some exceptions

The aforementioned tax benefits do not apply to everyone. In a number of cases, the tax authorities determine that some costs are not deductible. An example of this is that you are not entitled to tax benefits if you do not use the lease car as a business car. You are only entitled to this if you are actually going to use your lease car for business purposes. A friend who is not employed by your company but who does drive a lease car is not entitled to these tax benefits.