How does it work with VAT for private use of a business car?
If you also use a business car privately, you have to pay VAT on it. How much that is depends on your situation and whether you have kept proper records. Here we explain the VAT correction for business car in an easy way!
No records for private use?
Don't have records where you keep track of private journeys? No problem! Then use a standard percentage to calculate VAT:
- 2.7% of the list price of the car (including VAT and BPM).
- This also applies to cars you have via operational or financial lease.
Example:
You bought a car with a list price of €45,000.
- 2.7% of €45,000 = €1,215 VAT. You pay this for private use.
Do you buy the car later in the year? Then reduce the amount proportionally.
- For example: you buy the car on 1 September. Then you count 4 months: 4/12 x €1,215 = €405 VAT.
Do you use the car partly for exempt turnover (such as in healthcare)? Then you also reduce the VAT proportionally. Say 40% of your work is exempt, then you pay 60% of €1,215 = € 729 VAT.
What if you do have records?
With trip records, you calculate VAT based on actual private use. This is often more advantageous! Make sure you keep neat records of how many kilometres you drive privately.
How and when do you pay?
You declare the VAT for private use in the last VAT return of the year. You enter the amount under "private use" in the tax return.
- Does your financial year have more than 1 calendar year? Then you declare VAT at the end of each calendar year.
- Do you use the car for more than 4 years? Then the percentage drops from 2.7% to 1,5%.
- Did you not deduct VAT at the time of purchase (e.g. a margin car)? Then you use 1,5% instead of 2.7%.
Maximum VAT amount you have to pay
Sometimes you may apply a maximum adjustment. This is useful if you have deducted little VAT. The maximum correction consists of:
- That year's VAT on maintenance and use.
- 1/5 share of VAT on purchase (for the first 4 years after purchase).
Example:
You bought a car last year with a list price of €75,000. You then deducted €3,150 of VAT. This year you deducted €210 VAT for maintenance and €525 for use. Normally, you would deduct 2.7% x €75,000 = €2,025 VAT have to pay for private use. But the maximum rule makes it:
€ 210 + € 525 + 1/5 x € 3.150 = €1,365 VAT.
Car bought without VAT deduction?
If you bought a margin car or a car from a private individual, a lower adjustment applies:
- You calculate private use with 1.5% of list price.
- The correction is at most the VAT you deducted for maintenance and use.
Example:
You bought a margin car with a list price of €75,000. You deducted €210 VAT this year for maintenance and €630 for use. Normally, you would deduct 1.5% x €75,000 = €1,125 VAT pay. But the maximum is:
€ 210 + € 630 = €840 VAT.
Want to know how to calculate VAT on private use? Then read this article.
