VAT Assessment for Private Use of Company Cars; Penalty Reduced from 80% to 25%

Netherlands — VAT Assessment for Private Use of Company Cars; Penalty Reduced from 80% to 25% (District Court of Gelderland)

Summary

Company X BV (a subsidiary of holding company Y BV, whose sole shareholder was tax lawyer A) made several company cars available to A and his family. The Dutch tax authorities imposed a VAT assessment of €15,885 for 2017 because of the private use of those cars. The assessment was calculated using the standard 2.7% of the cars’ list price, in accordance with the Dutch VAT policy decree of 11 July 2012. In addition, a tax penalty of 80% (€5,345) was imposed.

The District Court of Gelderland upheld the VAT assessment because the company had not maintained a complete and reliable mileage log. As a result, the tax authorities were entitled to apply the standard 2.7% flat-rate calculation for private use.

However, the court reduced the penalty from 80% to 25%. It ruled that a 25% penalty for gross negligence is the appropriate standard under the Dutch administrative penalty rules (Section 25 of the Administrative Penalties Decree) and followed earlier case law rejecting the exceptionally high 80% penalty provided for in Section 28 of that decree.

Article

The ruling confirms that the legal basis for the 80% VAT penalty for private use of company cars remains weak in Dutch tax litigation.

To minimize the risk of both additional VAT assessments and penalties, businesses should:

• Keep a complete and accurate mileage log.
• Ensure any employee contribution for private use is properly documented.
• Maintain sufficient evidence demonstrating the extent of business use of company vehicles.

Source: District Court of Gelderland, 1 July 2026 (Case Nos. AWB 24/3061 and AWB 24/4796).

---

---