Don't charge too much VAT on the sale of your passenger car

The rules around deducting VAT on passenger cars and other business assets have undergone a real metamorphosis since 2013. For passenger cars, the VAT deduction must be based on one or more special methods (see our newsletter Informatief Special of 17 January 2013 for more details). One thing you can be sure of is that the deduction cannot exceed 50%. But depending on your private use of the car, it could also be quite a bit less. Fortunately, there’s also something positive – the rules have finally been clarified: when selling your passenger car, from now on you should no longer charge the full rate of VAT.

In principle, VAT should be paid only on a maximum of half of the sale price

If you sell a passenger car after 2013 for which you have deducted VAT at any point, you should charge 21% VAT only on a maximum of half of the sale price. "A maximum of half of the sale price" means:

  • If in the past VAT was always deducted from 50% of the value, then VAT is only payable on 50% of the sale price excluding VAT.
  • If you’re a sole trader and the car is only partially included in the assets of the business, and therefore VAT has only been deducted from a lower percentage of the value (such as 20%), from now on VAT is payable on a corresponding percentage of the sale price excluding VAT (in our example, 21% VAT should be charged on only 20% of the sale price).
  • If, for a company, VAT has been deducted from a lower percentage of the value (such as 20%), from now on VAT is still payable on 50% of the sale price excluding VAT since the car was fully included in the company assets. It may well be advantageous for the company to carry out a review if the five-year review period has not yet ended.

The above system applies regardless of whether you purchased the passenger car before or after 1 January 2013. All that matters is that at some point VAT was deducted on the purchase invoice. At the very least, remember to include the following statement on your sales invoice: "Reduced taxable amount, in application of Decision E.T. 119,650 of 20 October 2011".

21% VAT is still charged on the full sale price in exceptional circumstances

The above system does not apply to passenger cars for which your company has never been entitled to a VAT deduction. That would primarily be the case if your company bought the car from a private individual (which could be you or your partner) or if your company purchased a second-hand car under the margin scheme.

The requirement to register gets a broader scope
More entrepreneurs must register with the Crossroads Bank for Enterprises (CBE)
Under the aim of creating a more attractive business climate, changes were made to the existing company law. In that context, the legislator has done away with the ‘trader’ concept, replacing it with the umbrella term ‘enterprise. Besides forming the basis for the rules of the Code of Economic Law, the Judicial Code and the Civil Code, the new enterprise concept also has consequences for reg
More specific: matrimonial property law
A new compensation obligation in the legal system
What if a spouse practices his profession in a company whose shares all form part of his separate property? The Act of 22 July 2018 has introduced considerable changes to matrimonial property law. This article addresses a specific addition to that law, namely the possible disadvantage incurred by the matrimonial property when a spouse practices their profession through their own company1. 
Changes in the cary proxy and usufruct
Estate planning: recent developments
Over the last few months, we have regularly reported on the important changes in estate planning and inheritance planning. Below is an update of some of those changes.   The care proxy: secure your estate for later The classic example is a person who, due to a physical or mental limitation (e.g. coma, dementia), is – temporarily or permanently – unable to manage their assets properly.
Happy Brexmas?
How to prepare your company for Brexit?
On 10 December 2018, the British Prime Minister decided to postpone the vote on the Brexit deal in the House of Commons. The risk of a ‘no deal’ disaster scenario is increasing. What are the important dates? On 29 March 2017, the United Kingdom formally informed the European Council of its intention to leave the EU (according to the procedure provided in Article 50 of the Lisbon Treaty). C
A popular control structure
The all-powerful manager of a civil-law partnership: was it always a fiction?
The civil-law partnership has long been a popular control structure among wealth planners. In many cases, donors do not want to give up their assets entirely, and still want to retain some control over what they donate. Definitely in cases of transfers of family companies, the donors (often parents or family members) still want to retain control over the course of the business.  The advant
The tax framework
Company subsidies: exempted or not?
Various subsidies were briefly described in the article by our colleagues from Strategy and Operations. They explained that they can assist you and your company with guidance on subsidies, from A to Z.1 In this context, we would like to discuss the tax framework for subsidies: how are awarded subsidies treated tax-wise within companies? Are these subsidies exempt from corporation tax and, if
Right to deduct VAT possible for costs incurred during the purchase of shares
The Ryanair ruling
Right to deduct VAT also possible for costs incurred during the purchase of shares, if the purchase ultimately does not (fully) go ahead The European Court of Justice recently confirmed that VAT on costs incurred during the purchase of shares may be deductible even if the purchase ultimately does not (fully) go ahead. As such, the Court of Justice has upheld the principle that the preparatory t
What are the options?
The deduction for investment: an illustration of the options
The deduction for investment allows companies and natural persons who earn profits or benefits to reduce their taxable profits by placing part of the acquisition or investment value of investments in new tangible and intangible fixed assets. Depending on the size of your business and the nature of your activities, you can generally apply the regular, one-off deduction for investment of 20% (tem
Valuation of usufruct
Now also a witch hunt when usufruct is sold?
In previous editions, we have already written about the valuation of usufruct when purchasing property, but recently there have also been regular reports of checks on the valuation of usufruct when reselling. However, up until now, the case law has followed the viewpoint of the taxpayer. Brief description For several years, there has been a lot of controversy regarding the valuation of usufruc
Vlabel is using conciliatory language
Has the decrease in Flemish sales duty led to an increase in the costs for purchases of usufruct?
The decrease in sales duty: also for split purchase usufruct-bare ownership The recent drop in the rate (to 7.00%) for purchases of family homes comes with a number of conditions. For example, the purchaser must be a natural person. Following some uncertainty, it was subsequently confirmed that, in the event of a split purchase of such a property by a company for the usufruct and the bare owner f

Subscribe to our newsletter