Is there VAT on parking charges?
Parking charges only have VAT when you park with a commercial provider. If you park on the street with a municipality, then you pay parking tax and there is no VAT on that according to the Inland Revenue. This is separate from your business and you will therefore not see VAT on that receipt. If you park in a commercial garage, this does include VAT and you can reclaim it in your tax return if the costs are business expenses. So always keep the correct parking ticket so you can prove what you paid.
Reclaiming VAT on parking charges
When you park with a commercial provider, you may reclaim VAT if the trip is business and you have VAT-registered turnover. VAT on business car costs is deductible if you incur them for your business. The tax authorities stress that you can only deduct VAT if the costs are part of taxable turnover. If you park on the street with the municipality, you cannot reclaim VAT because no VAT is due on parking tax.
Commercial car park
With commercial providers, you pay VAT that you can reclaim if you made the trip on a business basis. You use the receipt or invoice from the garage for this purpose. You deduct the VAT in your tax return within the rules that apply to your business use.
Municipal car park
In municipal parking zones, you pay parking tax without VAT. Therefore, you cannot reclaim anything. You only keep the receipt as proof of the business expense for your profit.
Deducting parking costs
Parking costs are business expenses when you incur them for your business. The way you deduct them depends on how you use your car. The tax authorities distinguish between a car that belongs to your business assets and a private car that you use for business purposes. You process both situations differently in your administration and you may not include parking costs twice.
Company car
Do you use a business car, then you may deduct all parking expenses from your profit. The tax authorities count parking expenses as car expenses. This reduces your profit and your tax burden. Any private use is later corrected via the addition when you drive more than five hundred kilometres privately.
Private car
If you use a private car for business trips, you may not deduct your parking costs separately. You process car expenses via the kilometre allowance of €0.23 per kilometre. This rate includes all car costs including parking. You may therefore not separately include parking costs as a business expense in your profit.
Need receipt or invoice?
You always need proof to book parking charges or reclaim VAT. For amounts up to €100, a simple receipt without full invoice requirements is allowed. However, it must be clear that your company is the customer. The tax authorities allow a simple invoice form for this. For higher amounts, the law requires a full invoice listing you as the buyer. Keep all parking receipts so you can substantiate your business trips in case of an audit.
Processing in your accounts
How you account for parking costs in your accounts depends on whether the car is used for business or private use and whether there is VAT on the costs. The type of parking also plays a role.
- If the car is on the business, then process parking costs as business car expenses.
- You deduct VAT only on parking charges from a commercial provider.
- Municipal parking fees are booked without VAT.
- If you use a private car, you process the trip via the mileage allowance.
- For private use, don't include separate parking costs as a profit expense.
- You can reclaim VAT on commercial parking charges if, the trip is business and your turnover is subject to VAT.
