- A company must sell a car to its director at the car’s actual value for dividend and income tax purposes, but VAT rules differ.
- If the sale price for VAT is below the car’s actual value, additional VAT may be charged, depending on whether there is abuse of rights.
- Two courts and a tribunal had differing opinions on this matter.
- In one case, a director bought a car for 15,000 euros, valued at 75,000 euros, with the rest considered as disguised dividend for tax purposes. VAT was calculated on 15,000 euros, but the tax authority imposed additional VAT on the remaining 60,000 euros.
- In another case, a car valued at 29,750 euros was sold for 2,624 euros, with the rest treated as disguised dividend. VAT was paid on 29,750 euros, but the company objected to VAT on the 27,126 euros difference.
- Courts had different rulings on whether VAT should be based on actual value or agreed lower price.
- Amsterdam court ruled there was abuse of rights, siding with the tax authority.
- ‘s-Hertogenbosch court ruled there was no abuse of rights, siding with the company.
- Abuse of rights is considered when a tax advantage is gained against the law’s intent and the transaction’s main goal is to achieve this advantage.
- Amsterdam court found abuse of rights due to lack of business motives and quick resale of cars at low prices.
- ‘s-Hertogenbosch court found no abuse of rights, as the sale occurred five years after purchase and was not primarily for tax advantage.
Source: vanoers.nl
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
