- Belgium allows VAT deduction on expenses related to company cars in proportion to their professional use, but the deduction should not exceed 50% even if professional use is higher.
- Employers generally do not require employees to contribute, but if they do, the VAT deduction is typically 50%.
- Employers are increasingly making company cars available in cross-border contexts, which can lead to foreign VAT obligations.
- Recent European case law has created uncertainty, and a circular has been issued to provide clarity. Foreign employers are expected to remit Belgian VAT on company cars provided for private use to employees residing in Belgium for over 30 days, provided it’s done for consideration.
- The circular adopts the conditions from the aforementioned case law and concludes that there is a supply against “consideration” if payment is made by the staff member to the company, a portion of the remuneration is withheld by the company, debiting is done from the current account of the company’s manager, director, etc., or if the staff member chooses between various benefits offered by the company.
- The taxable amount should be determined as per Belgian VAT rules concerning the normal value. European case law is interpretative and should be applied retrospectively, but the administration has chosen to impose these rules as a concession only starting from July 1, 2021.
Source VATconsult
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