The pros and cons of a leased car
The leasing form of financing is being used more and more often for cars. You can lease a car either privately or through your employer. If you have a company car through work, this means you have a vehicle provided by your employer. What are the tax implications of having a leased car? And what are the pros and cons?
What is a leased car?
Simply put, a leased car is a vehicle made available through leasing, but it remains the property of the leasing company. The leasing company is often also responsible for the costs of major maintenance on the car. Many companies make use of leased vehicles, but it is also possible for a private individual to lease a car.
Leasing is essentially a form of financing that offers many advantages: the user can drive a relatively new car, while the costs of major maintenance are covered by the leasing company. One drawback can be the additional tax charge (bijtelling).
Tax implications of a leased car
Unfortunately, there are not only advantages to leasing. If an employee receives a leased vehicle from work, they will also have to deal with additional tax costs. If the employee drives more than 500 kilometres per year for private use in the leased car, the car will be taxed and the additional tax must be paid. Because of this taxation for private use, the net monthly salary can turn out lower. If the employee keeps a good record of kilometres driven, for example using a GPS system… You can also keep the record manually, but experience shows this is very time-consuming.
Advantages of a leased car
The advantages of a leased car are:
- For businesses, a leased car is attractive from a tax perspective
- The costs for major maintenance are covered by the leasing company
- Costs are known in advance, excluding fuel
- The leasing company arranges almost everything
- You are fully insured by the leasing company
- At the end of the contract, you have the option to start a new contract and therefore choose a new car
Disadvantages of a leased car
- The costs of leasing can be high
- You do not build up a no-claims bonus
- Maintenance isn’t always easy to schedule
- Some leased cars are not tax-efficient for employees
- Because of a leased car, your net salary is lower, so in the case of unemployment you would receive less in benefits
- Keeping a mileage log requires a lot of time
