The pros and cons of a leased car

The financing form of leasing is increasingly used with cars. You can lease a car either privately or through your employer. When you have a lease car through your work, it means you have a company car. What are the tax implications of a leased car? And what are the advantages and disadvantages?

What is a lease car?

Simply put, a lease car is a car that is made available through lease, the car remains the property of the leasing company. Often, the lease company is also responsible for the cost of major maintenance on the car. You see many companies using lease cars, but it is also possible for an individual to lease a car.

Leasing is actually a form of financing that has many advantages; for instance, the user can drive a relatively new car, while major maintenance costs are the responsibility of the leasing company. A disadvantage can be the additional tax liability.

Tax consequences of leasing a car

Unfortunately, there are not only advantages to a lease car. When an employee receives a company lease car, he or she will also have to deal with additional taxes. If the employee drives more than 500 kilometres per year privately in the lease car, the car is taxed and an additional taxable benefit must be paid. The additional taxable benefit for private use of the car may reduce the net salary per month. If the employee keeps good mileage records by, for example, a GPS system. You can also do the registration manually, but experience shows that this is very time-consuming.

Advantages lease car

The advantages of a lease car are:

• For companies, a leased car is fiscally attractive
• The cost of major maintenance of the car is borne by the lease company
• The costs are known in advance, excluding fuel costs
• The lease company takes care of almost everything
• You are all-risk insured by the lease company
• At the end of the contract period, you have the option to enter into a new contract and thus the opportunity to choose a new car

Disadvantages of a leased car

• The cost of a leased car can be high
• You do not build up any no-claims
• Maintenance is not always easy to schedule
• Some leased cars are fiscally unattractive for employees
• You have a lower net salary due to a leased car, resulting in lower benefits in case of unemployment
• Keeping mileage records takes a lot of time