VAT Rules for Company Cars: Employer Obligations for Private Use and Deduction Rights Explained

• Providing company cars to employees raises VAT issues, especially if private use is allowed.
• As of April 30, 2025, tax authorities clarified that VAT applies if the employee provides any form of consideration (payment, salary deduction, or renounced benefit), regardless of the form.
• If the car is provided free and VAT was deducted on purchase, private use is treated as self-supply and VAT is due; if VAT was not deducted, no VAT is due.
• Strictly professional use and free shuttles for commuting are generally not taxed.
• VAT is calculated based on the consideration provided, and territorial rules depend on the residency of the employer and employee.

Source: rsm.global

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.

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