VAT correction for private use of a company car

Two methods

You can base the correction on the actual private kilometres from your mileage log, or on a lump sum as a percentage of the list price. Let your accountant determine which is more favourable for you.

When is VAT correction for private car use applicable?

The obligation for VAT correction arises regardless of whether the user pays an addition to taxable income (bijtelling) for private use in income tax or payroll tax. The two systems, VAT and income tax, are separate. Private use includes not only journeys to and from home, but also journeys of a purely personal nature, such as holidays, shopping, and hobbies. Even if the car is registered to the business, commuting generally counts as private use for VAT correction purposes, unless specific circumstances dictate otherwise.

What is the difference between private use and VAT deduction of a car?

The VAT deduction on the car itself relates to the investment (purchase or lease). The VAT correction on private use focuses on the running costs of the car, such as fuel, maintenance, repairs, and depreciation. The Dutch Tax Authorities apply specific rules for calculating this correction, where the ratio between private and business kilometres plays an important role. Without a mileage log, a standard lump sum correction of 2.7% of the list price (including VAT and BPM) is often applied.

Frequently asked questions