- Circular 807‑1 (issued 21 Oct 2025) repeals Circular 807bis and clarifies VAT rules for company cars in line with the CJEU “QM” case (C-288/19).
- The supply of company cars for private use by employees is treated as a “long-term hire of a means of transport” and is subject to VAT at the employee’s place of residence.
- The new Circular prohibits splitting the VAT base between “professional” and “private” use; the full value is now subject to VAT.
- Employers can now fully recover input VAT on company cars, as the entire supply is considered a rental.
- The Circular clarifies that if an employee uses the car for employer’s business, it is a separate service and may be reimbursed; taxable status depends on whether the car is provided for consideration.
Source: kpmg.com
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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