Since the beginning of Summer, the government in the Netherlands, the government has decided to promote electric vehicles with a series of measures taken to help the industry. Today I met up with a few guys from the Dutch Department of Transportation and a few other government organizations to discuss some of these benefits amongst others. This post discusses some of these benefits.
Early August I started a series of blog posts trying to answer the question whether or not I will be able to drive an electric car. One of the aspects obviously is to see how my driving patterns fit in with the limited range that the current generation of electric vehicles have. This is what I did in previous blog posts. Of course, the range aspect is not the only thing I have to consider when deciding whether or not to start driving an EV. Cost of the main other one. I firmly believe that sustainable products should not cost more than product that are not sustainable in one way or the other. That’s I wanted to figure out what the tax benefits where and how they relate to each other. Let’s discuss each and every one of them individually.
BPM (or belasting op personenauto’s en motorrijtuigen)
BPM is a form of taxation that has to be paid for every registered car or motorcycle in the Netherlands. For a gasoline-powered car this is 40% is the net list price minus €1288. For diesel-powered cars it is 40% minus €366. For now, this taxation has been abolished for cars powered by 100% electric vehicles, hybrid vehicles capable of driving at least 24 kilometers solely with a battery or fuel cell and cars with hydrogen-based engine. To give you an idea what this means: suppose the list price of your car is €25.000. Excluding VAT (based on the list price less BPM) this car would cost you €33.712. Including VAT (19%) this car will set you back €38.462.
MRB (or motorrijtuigenbelasting)
MRB stands for Motorrijtuigenbelasting and is the Dutch road tax. The amount of MRB you pay depends on the weight of the vehicle you drive, the kind of engine, the amount of CO2 it emits and the province you live in. In my current situation (Nissan X-Trail, ~1350kg, gasoline-powered, living in Utrecht), I pay €660 in MRBs on a yearly basis. The good thing is, the MRB has been abolished as well for electric vehicles. This saves you a mere €660 on a yearly basis for the kind of car that I drive. Now, you can’t get a Nissan X-Trail powered by electrons, but it’s still quite a bit of money, even for a smaller car.
Income tax for leased cars
This is a special one. In the Netherlands, lots of people drive leased cars provided by their employers. When you drive a leased car, you pay more income tax. In practice it works like this. If you drive a Volkswagen Golf with a total price of €30.000 (including VAT and BPM) you have to add a certain percentage of that price to your gross income (depending on the amount of CO2 the car emits it’s 14%, 20% or 25%). Income tax varies from 30-something% to 52%. I always use 25% for my car with an income tax of 50%, which means I pay 12.5% of the list price of my car on a yearly basis! This quickly amounts to several thousands of Euros!
For electric vehicles, the current legislation is to calculate a lower percentage of only 10%. This would mean that in comparison to my current car, I only pay 5% of the total list price per year, instead of 12.5%!
No in my case, this doesn’t hold, because I bought the car in person. But for leased cars, this is definitely interesting.
Another interesting fact is that several parties have called for totally abolishing this kind of taxation all together for a certain period. This would make things even more interesting. I learnt today that this is just talks, and hasn’t been turned into concrete legislation yet, so we’ll see what happens to that.
Investment benefit (investeringsaftrek) for companies
Another benefit the government has given companies that own electric cars has been put under the MIA/Vamil arrangement. From the Senter Novem website:
The Netherlands aims to create a sustainable economy. One of the ways to reach that goal is to stimulate the development and use of environmental friendly equipment and machinery. Therefore the Dutch government initiated several programmes that offer financial support to participants in the innovation chain. The MIA\Vamil supports enterprises at the end of the innovation chain. These programmes facilitate the use of new technologies and stimulate the introduction of new technologies on the market.
Through two programmes, implemented jointly by SenterNovem and the Dutch Tax authorities, Dutch companies investing in environmental friendly equipment can deduct part of the costs from their fiscal profit. As a result, the programmes encourage introduction of innovative, environmental friendly technologies.
Through the MIA programme, companies can deduct up to 40 percent of their investments (purchase costs and production costs) from their fiscal profit in the year of procurement.
The Vamil programme gives entrepreneurs the option of accelerated depreciation, which can result in lower interest payments and improved liquidity.
For electric cars, I assume the maximum percentage holds for the MIA programme, meaning that you can deduct 40% of the investment in an electric vehicle (obviously this is going to be gross, not including VAT) before taxes. Dutch profit tax is approximately 25% (I’ll look this up later), so for profitable companies, this means 25% of 40% = 10% of the car is subsidized by the Dutch government. This totals to €2.500 for a €25.000 electric car (assuming there would be one).
The Vamil programme is a bit different. Let’s say the car is worth €2.500 after 5 years (of depreciation). Since you can now depreciate the car in just one year, this results in improved liquidity and calculating interest, this would also help companies a bit.
From what I’ve read, the maximum tax benefit you can get from the MIA and Vamil arrangements in €8.000.
Relating it back to my own situation
Well, as you can see above, the government has given lots of incentives for people to start buying electric cars. I’m in the lucky situation that I have a personal holding company. When buying an electric car, this would give me the opportunity to benefit from both the lower taxation for leased cars as well as the ionvestment benefit. Later on I’ll explain you how to will help make the decision to start driving an electric car (if I will actually do this
).

