The taxable benefit for a company car must be taken into account if the employee used the company car provided by his employer for more than 500 private kilometers. The Dutch wage tax act determines that kilometers for commuting by the employee do not qualify as private kilometers, but as business kilometers.

In a case before the Court in Arnhem, a director and major shareholder received a company car from his company. During the year 2007, the director and major shareholder kept a proper kilometer log during the calendar year 2007 and no taxable inclusion was taken into account.

The kilometer log shows that the director and major shareholder went home for lunch every day and these kilometers were recorded as commuter traffic. The inspector determined that these lunch break kilometers did not qualify as commuter traffic, but as private kilometers. The inspector imposed an additional wage tax assessment for the year 2007 because the director and major shareholder used the company car for more than 500 private kilometers during the lunch breaks. In dispute was whether the kilometers for the lunch trips qualified as a private kilometers or commuter traffic .

The Court of Appeal in Arnhem decided that the lunch trips qualify as commuter traffic. The Court also concluded, based on the legislative history, that commuter traffic qualifies as business traffic. The Court of Appeal decided that the tax inspector imposed the additional wage tax assessments incorrectly. This judgment is in accordance with the judgment of the Court in Arnhem in the first instance of which we have informed you in our September 2009 newsletter.