Purchasing in the Netherlands, finance questions

[nicke]

Hi,

Apologies for using English, my Dutch isn't fantastic at the moment.

I'm British but living in the Netherlands and looking to 'purchase' probably a Tesla Y.

Can you provide any advice please on the most tax effective or cheapest way to finance? I'm struggling to understand all the options. Or could you provide resources that I can look at.

I have my own BV so have the option of a private or business purchase/lease.

From what I can see of the 2021 tax rules putting the car through the company isn't that beneficial since the employee benefit in kind almost seems to offset the advantage of paying before tax through the company rather than from net pay.

I checked a few websites and the finance lease costs seem to be really expensive? Depreciation on the car is low yet a three year lease is coming in at over €1,000 per month.

So any advice of my options would be super.

Thanks
Nick

 

[cousin_IT]

I think this isn't the right place for good financial advice, there's just too much to take into consideration. First you'll need to consider if you want your company to posess the car. If you choose yourself as a private entity then you can probably finance it at around 4% and pay yourself a fee per km from your BV. If you want your BV to posess the car you could again finance it so that when the load is repaid your BV owns the car or you can lease. If your BV makes the car available to you as a private person you'll need to pay "bijtelling", a form of added tax based on the retail value of the car that you'll need to add to your income.

I recommend to talk to your accountant to dicsuss these options in detail.

 

[wooter]

Hi Nick,

As you probably know, the Y is not available yet in Europe.

If you have your own BV, you have a number of options:

• Pay cash and own the car outright
• Finance through a bank, and own the car after paying off the financing
• "Rent" through a bank, and possibly buying the car after the rental period
• Lease through a leasing company, and possibly buying the car after the leasing period

In general, all these options are available for you as an individual, or for you as an employee of your BV. The biggest difference between the two:

• as an individual, you pay the car after taxes on your wages
• as a BV, you and your BV will have to pay "bijtelling" taxes on the part of the car that is considered "wages" because you use the car for private travels too. This is in the Netherlands currently 12% on EV's while fossil fuel cars are charged 22%.

Generally speaking, financing/renting/leasing your car through your BV will be cheaper than to buy it privately.

Also, most leasing companies price Tesla's quite expensive because they don't get discounts from Tesla, and are unknown on the residual value after the lease. Other brands do give strong discounts to lease companies, and guaranteed residual value and will take back the car after end of the lease, which influences the monthly leasing price.

For Tesla's, I feel it is more practical to rent though a bank, where you have more freedom to determine the residual value. If you also promise to buy the car after the rental term, banks are quite OK to accept a higher residual price and therefore a lower monthly payment. Renting also finances the VAT, which a clean finance through a bank does not.

So my advice: get in touch with some banks and talk about their long term renting offerings with high residual prices.

 

[nicke]

Excellent, many thanks for the information. I appreciate it is a difficult area with so much to consider.

For background though my BV is 100% owned by me so from that sense it doesn't really matter who the 'owner' of the car is. I don't really travel for business (do any of us now!) so the personal mileage claim doesn't really help.

I understand the bijtelling for 2021 has a far bigger tax impact than it did in previous years. If I've read the information correctly the benefit is now assessed on 12% value to €40,000 and over that at 22%. So let's say I pay 49.5% tax and purchase a €70,000 car my additional tax to pay each month is approx is €470 - that seems to offset the tax benefit of the company paying before tax compared to me paying personally net of tax.

Thank you for the background on the residual value - that was the piece I was confused with, it does seem that the companies are assuming a lower than market value residual thus this increases the finance cost of course - that isn't a problem if there's an option to purchase at the end but if the car is returned at the end of the lease then it does make it expensive. A UK YouTube person recently traded his 3 with Tesla and the 'depreciation' over the two years of ownership was really low.

And thank you for the bank option, I think that makes most sense as my starting point and perhaps I can negotiate with the same type of deal that a lease company offers but with a higher residual - essentially unless it's an operational lease the leasing company and bank are really providing the same financing service.

Cheers
Nick

 

[wooter]

FYI, in Belgium I went for a "financial renting" with my bank: my company pays the monthly invoice with VAT, can deduct the VAT and I have an agreement that at end of the contract, I have to buy the car for a relatively low residual value. Don't forget that if you accept lower monthly payments, this might bite you at the end because the outstanding value of the car is high, and might be higher than the residual value. That's why leasing companies and banks want to ensure the outstanding value is lower than the real residual value, but you only know for sure what the residual value is after the end of the contract.

I'm pretty sure that even with 12% bijtelling, there is a case to be made to have your company own the lease of the car.

 

[pvkeep]

Nick, you might also want to consider buying a demo car or taking over someone else's existing lease. That gets you a discount on the list price and you'd also profit from last year's bijtelling rules, i.e. 8% over the first 45.000,-

 

[nicke]

FYI, in Belgium I went for a "financial renting" with my bank: my company pays the monthly invoice with VAT, can deduct the VAT and I have an agreement that at end of the contract, I have to buy the car for a relatively low residual value. Don't forget that if you accept lower monthly payments, this might bite you at the end because the outstanding value of the car is high, and might be higher than the residual value. That's why leasing companies and banks want to ensure the outstanding value is lower than the real residual value, but you only know for sure what the residual value is after the end of the contract.

I'm pretty sure that even with 12% bijtelling, there is a case to be made to have your company own the lease of the car.

Many thanks! I'm less concerned with the residual value if I have the option to purchase at the end. I'll take a closer look and also investigate the BTW options in the NL.

 

[nicke]

Nick, you might also want to consider buying a demo car or taking over someone else's existing lease. That gets you a discount on the list price and you'd also profit from last year's bijtelling rules, i.e. 8% over the first 45.000,-

Thanks, I hadn't considered that as an option or was aware that that the 2020 registrations would still qualify for the 2020 tax rates when purchased in 2021. The Y isn't available of course but I have been torn between the 3 and Y and after checking there is stock available now of the 3 performance. Interesting option, more number crunching!