Update: VAT & company cars

Written by Philippe Vanclooster 8 February 2013


With more than a year having passed since administrative VAT decision ET.119.650, the Minister of Finance announced that the VAT authorities will publish shortly the long-awaited VAT addendum stipulating how private use of company cars is to be determined.

The new guidelines will take effect on 1 January 2013.

For 2012, the administrative tolerance set down in the administrative decision ET.119.650/2 will be extended till 31 December 2012, allowing you to apply the old VAT benefit-in-kind system.

The new addendum allows three methods to fix the private and business use of a company car, based upon:

1) a system of logbooks for each company car;

2) a lump sum for each car to determine its private use:

= home-work distance (in kms) x 2 x 200 working days + 6,000 (additional private kms)
total distance covered by company car (private + business kms)

Please note that methods 1 and 2 can be combined within a single given car fleet.

3) Lump sum for fleets with four or more cars.

This method entails a direct limitation on the VAT deduction for company cars up to 35%. It cannot be combined with the above methods and has to be applied to the whole fleet for a 3-year period.

On top of these lump-sum methods, the addendum also allows various ways of fixing the tax base for company cars made available to employees in return for a fee.