It sounds like the ultimate entrepreneur’s dream: a glorious day, the sun shining while you set course for a lake to bob around blissfully… on the boat you bought through your business. But is that really possible? Or do you risk sailing straight into a tax storm?
Let’s be honest: who wouldn’t want that? A boat for a company outing, a floating meeting venue or simply a business investment for networking with clients. The tax temptation is great, because a boat on the business means you can deduct the costs and reclaim the VAT. But before you dig the fenders out of the shed, grab the cool box from the storeroom and race to the supermarket for some tasty nibbles: there are quite a few catches to a purchase like this.
The taxman is watching
The Tax Authority (Belastingdienst) keeps a close eye on boats. Not because they fancy coming along for a ride, but because they like to check whether a boat is really being used for business. You can only put a boat on the business if you can demonstrate that you use it for business.
Examples are:
- Staff outings (provided this can be properly substantiated)
- Client events or networking gatherings on the water
- Advertising and promotional purposes (think of a floating showroom)
But unfortunately, a day of sunbathing with the family on the IJsselmeer doesn’t count. The Tax Authority sees that as private use, and you have to pay an addition to taxable income for private use (bijtelling) on it.
The grey area
Do you also use the boat privately? Then you are required to make a correction for the private use. Compare it with the bijtelling for a company car. Here too: the more private use, the higher the correction. The same goes for VAT: if you also use the boat privately, you have to pay back part of the VAT.
The amount is often based on an estimate of private use or on a mileage or sailing log. In practice this can get quite complicated – and the taxman will be watching closely to see whether you’ve done everything by the book.
So, a boat on the business? It can be done, but it’s certainly not plain sailing towards tax benefits. Make sure you’re well prepared, so you don’t unexpectedly find yourself going under.