From 1 January 2027, a new 12% pseudo-final levy will apply to employers providing petrol, diesel or hybrid passenger cars to employees for private use or commuting.
This measure has been enacted and may result in significant additional employer costs.
What will change?
- 12% additional tax: calculated annually on the vehicle’s original catalogue value. For vehicles over 25 years old, the current market value applies.
- Commuting counts as private use: even where an employee drives no more than 500 private kilometres annually or is exempt from the normal benefit-in-kind taxation.
- Zero-emission vehicles: fully electric and other zero-emission passenger cars are excluded.
- Existing vehicles: transitional protection applies to qualifying vehicles made available by the same employer before 1 January 2027.
- Rental vehicles: rental cars, car-sharing arrangements and replacement vehicles may also fall within the scope. Even short-term use can trigger a full month’s levy.
- Vehicle categories: the levy applies to passenger cars (category M1), including certain passenger vans. Commercial vans and trucks are generally excluded.
The levy is an additional employer cost, separate from the employee’s normal benefit-in-kind taxation, and cannot be passed on to employees.
What are the financial implications?
A petrol car with a catalogue value of € 40,000 could result in an additional employer tax cost of € 4,800 annually, equivalent to € 400 per month.
Transitional protection and proposed exemptions
Existing qualifying vehicles benefit from transitional protection until 17 September 2030. The relevant date is when the specific vehicle was first made available by the employer. Simply signing a lease agreement before 2027 is insufficient.
The Dutch government has proposed extending the transitional period until 31 December 2030. Additional exemptions have also been proposed, subject to conditions, for:
- Occasional provision of a vehicle for one period of up to seven consecutive days per vehicle, per employer, per calendar year.
- Temporary replacement vehicles provided for up to 14 days during maintenance or repairs.
- Certain manual-transmission driving instruction vehicles.
These additional amendments are not yet final.
Relevance for staffing and payroll companies
Where vehicles are provided to temporary agency workers, secondees or employees of foreign payroll providers, it is necessary to establish which entity makes the vehicle available and which entity qualifies as the Dutch payroll tax withholding agent.
Foreign payroll arrangements or NEN certification do not automatically provide an exemption.
What should employers do before 2027?
We recommend:
- Reviewing your vehicle fleet, including registration numbers, catalogue values, vehicle classifications and initial dates of provision.
- Identifying vehicles eligible for transitional protection.
- Reviewing company car, rental and replacement vehicle arrangements, including commuting.
- Assessing mobility policies and agreements with employees, rental providers and subcontractors.
- Considering alternatives such as zero-emission vehicles and mileage reimbursements, taking account of the tax and employment implications.
- Preparing your administration and payroll processes for the new levy.
When is the levy payable?
The pseudo-final levy is paid through the Dutch payroll tax return. The levy relating to 2027 must be declared and paid no later than the second payroll tax return period of 2028. Earlier payment is permitted.
How can AAme assist?
Would you like to understand how this measure will affect your organisation?
AAme can review your vehicle fleet, mobility arrangements and any foreign payroll structures. We can identify potential tax exposure and advise on practical opportunities to reduce additional employer costs.
Please feel free to contact us to discuss your situation.