The VAT adjustment for the private use of a company car is often based on 2.7% (or 1.5%) of the car’s list price.
Main rule
That is not the general rule. The general rule is that the VAT adjustment must be based on the number of kilometres actually driven for private purposes in a calendar year and the VAT actually deducted in that calendar year. We would note in this regard that, for VAT purposes, the kilometres driven as part of a regular commute to work are classified as private kilometres (for payroll and income tax purposes, these kilometres are classified as business kilometres).
As keeping track of the actual private use of a car is rather labour-intensive from an administrative point of view, the State Secretary for Finance has approved that the VAT adjustment is set at 2.7% of the car’s list price. If no VAT was deducted at the time of purchase, or if four full calendar years have elapsed since the year of purchase, the VAT adjustment, based on the approval, amounts to 1.5% of the list price.
Proof
Gelderland District Court in August, referring to a ruling In a 2017 ruling, the Supreme Court held that a retrospective estimate of the number of kilometres travelled by car does not constitute sufficient evidence of the actual number of kilometres travelled. In the grounds for the decision, only the entrepreneur’s commute was counted as private use, whilst the mileage records also showed other private journeys. Furthermore, the entrepreneur had partly estimated the private use on the basis of average fuel consumption and average fuel prices.
The Court also rules that, if the business owner fails to provide sufficiently reliable evidence, the Tax and Customs Administration may also base its assessment on the aforementioned 2.7% (or 1.5%). The Court states that, in the absence of specific details provided by the business owner, this flat-rate figure is deemed to be a reasonable estimate of the expenditure on private use.
Fine not reduced
The Tax and Customs Administration has imposed a late payment penalty in respect of the VAT adjustment because the VAT on private use was paid late. The business owner argues that the penalty should be reduced on the grounds of financial circumstances. The Court did not consider the general assertion that the coronavirus crisis had led to a fall in turnover to be sufficiently substantiated, partly because turnover has since risen again and the penalty is relatively small (the penalty amounted to €413).