From 1 July 2011, VAT on the private use of the company car must be paid in the last period return of each calendar year. Before this date, an adjustment had to be made to the deducted VAT. In practice, this makes little difference, but the change was necessary because, based on case law, the old system no longer seemed legally tenable.
The VAT payable for private use must be determined based on the actual number of private kilometres driven in the calendar year. Unlike for wage and income tax purposes, commuting kilometres qualify as private kilometres for VAT purposes. Since many entrepreneurs do not keep track of business and private kilometres driven, the VAT to be paid may also be determined at a flat rate of 2.7% of the catalogue value of the car (in some situations, this percentage is reduced to 1.5).
Immediately after its introduction, the new flat-rate scheme was called into question and test procedures were initiated. Entrepreneurs who wanted to benefit from a positive outcome of those proceedings joined in by objecting (pro forma) to VAT paid under the scheme. For many entrepreneurs, advisors have filed a collective objection. This collective pro forma objection for 2011 therefore also applies to 2012, 2013 and 2014.
On 31 March 2015 (publication on 17 April 2015), the Arnhem-Leeuwarden Court of Appeal ruled in four test cases concerning the payment of VAT for the private use of the company car. As the Arnhem District Court did at an earlier stage, the Arnhem Court of Appeal also dismissed the appeals and ruled in favour of the Tax Authorities. It can be expected that the Court of Appeal's rulings will be appealed to the Supreme Court. We will therefore have to tread water before we know for sure whether the (fixed) levy will be upheld. The pro forma appeals will be stayed for the time being.