January is the month when business owners traditionally find themselves sweating over the final VAT return for the previous calendar year. Below is a brief overview of a few points to bear in mind. Please do let us know if you would like to find out more about these topics.
Latest VAT return or supplementary return
It is a common misconception that all errors in the relevant year may be rectified in the final VAT return. Discrepancies in VAT returns for previous periods may only be included in the return for the current period if the total amount of these corrections does not exceed €1,000. If the total amount is higher, the business owner is legally obliged to submit a supplementary return for the previous period.
Property notification
A (further) statement must be issued in the following two situations:
– a buyer who acquired property in 2014 and, in doing so, agreed with the seller that the supply would be subject to VAT (no later than 28 January 2016);
– a tenant who no longer uses the leased property for 90% or more of VAT-taxable supplies (in certain situations, the leased property need only be used for 70% of VAT-taxable supplies).
Private use of car
Throughout the calendar year, a business owner may deduct the VAT charged on the cost of a car. Naturally, this is only permitted to the extent that the car is used for VAT-taxable supplies.
At the end of the year, the VAT deduction must be adjusted to take account of the use of the car for the private purposes of the business owner or employee.
This private use adjustment is based on the ratio between the kilometres driven for private purposes (which, for VAT purposes, also includes the distance travelled between home and work) and the total number of kilometres driven. However, many drivers of company cars do not keep track of the kilometres and make use of the approval under which the private use adjustment amounts to 2.7% of the car’s list price (if no VAT was deducted when the car was purchased, or if, after five years, the aforementioned 2.7% is reduced to 1.5%).
The legal proceedings challenging this flat-rate method of adjusting VAT deductions on the private use of cars – which has been in use since 1 July 2011 – are still pending before the tax court. The rulings handed down so far are not particularly encouraging, but if you wish to benefit from a possible positive outcome, you must ensure that your formal rights are safeguarded in good time by lodging (pro forma) objections.
Review
VAT deductions made during the calendar year are provisional. The final VAT return must specify which portion of the VAT may be definitively deducted, based on the figures for the entire calendar year.
Fixed and movable business assets must then be monitored for 9 and 4 years respectively. In each of these review years, 1/10th and 1/5th respectively of the VAT deducted in the year of commissioning must be reviewed.
BUA
BUA stands for the Decree on the Exclusion of VAT Deduction. Under this decree, the deduction of VAT on various benefits in kind provided to employees must be reviewed, but only where the total value of these benefits in kind exceeds €227 in a calendar year. The provision of food and drink from a company canteen constitutes a separate category in this context (the canteen scheme).
We would be happy to help you determine whether, in your situation, the BUA results in an adjustment to your VAT deduction.