From 1 January 2027, employers will have to deal with the pseudo final levy.
In short, an extra tax.
We understand that this raises questions.
That’s why we’ve listed the 10 most frequently asked questions below, with clear answers.
1. What is the pseudo final levy?
The pseudo final levy is an additional tax for employers.
You pay this tax if, from 1 January 2027, you make a fossil-fuel lease car available to an employee. This includes petrol, diesel and hybrid cars that are also used privately.
The levy is 12 percent of the catalogue value per year, including VAT and BPM.
Good to know:
- The pseudo final levy is separate from the employee’s benefit-in-kind tax.
- You are not allowed to pass these costs on to the employee.
2. Who has to pay the pseudo final levy?
The levy applies to:
- Employers who provide a fossil-fuel lease car for private use. Commuting counts as private use.
- Directors and major shareholders who drive a lease car through their private limited company.
- The levy does not apply to:
- Self-employed professionals and sole traders, as they do not pay payroll tax.
3. What counts as private use?
The tax authorities apply a broad definition of private use. This includes:
- Private trips in addition to business mileage.
- Commuting, even if you stay below 500 private kilometres per year.
- If the car is used exclusively for business, with no private trips and no commuting, the levy does not apply.
4. Which vehicles does the levy apply to?
The pseudo final levy applies only to:
- Passenger cars that are not fully emission-free, such as petrol, diesel and hybrid vehicles.
- The levy does not apply to:
- Fully electric or hydrogen-powered cars.
- Cars used exclusively for business purposes.
- Vans, trucks and similar vehicles.
5. Is there a transitional arrangement?
Yes. Lease cars that were already made available to an employee before 1 January 2027 are exempt until 17 September 2030.
Please note:
- After this date, the levy will apply, unless the car is fully electric.
- If the car changes employer during the transitional period, the exemption expires and the levy may apply immediately.
6. How is the levy calculated and when do you report it?
The levy amounts to:
- 12 percent per year, or 1 percent per month, of the catalogue value.
- The levy is calculated per month.
- Just one day of private use in a month is enough to trigger the levy for the entire month.
- The pseudo final levy is usually reported in the second tax return period of the following year.
7. Can the levy be passed on to the employee?
No. The pseudo final levy is entirely the employer’s responsibility. You are not allowed to:
- Charge it to the employee.
- Include it in a higher personal contribution.
8. What if a lease car is only available for a short time?
The levy still applies.
- If the car is available for private use for just one day in a month, the levy applies for the whole month.
- This also applies to replacement cars or holiday cars, as long as they are not fully electric.
9. How can you reduce the impact of the pseudo final levy?
You can limit the impact by:
- Switching to fully electric lease cars.
- Making use of the transitional arrangement for contracts starting before 2027.
- Reviewing your mobility policy, for example by:
- Using mobility budgets.
- Offering electric shared cars for business trips without private use.
Please note: if a mobility budget is effectively used to finance a company car, this may still be seen as providing a lease car. In that case, the levy may still apply. This topic is currently under discussion with the tax authorities.
10. Why has the pseudo final levy been introduced?
The government wants to encourage employers to choose emission-free mobility. Fossil-fuel lease cars become less attractive, while electric cars become more appealing. The goal is to reduce CO₂ emissions.