Belgium Changes VAT Deduction Rules

Bart Vanham

By Bart Vanham, TCOPlus

As of January 1, 2013, the application of the deduction rules on (a.o.) cars changed in Belgium. Where before 50% of the VAT on cars could be deducted, the deduction is now limited to only the professional use of the car with a maximum of 50%.  The authorities have proposed 3 methods to determine the professional use of the car:

  • A kilometer registration
  • A semi-forfeit method: the private use is calculated based on distance home-work x 2 x 200 days + 6000 km for weekend and holidays compared to the total kilometers driven by the car in a year
  • An optional forfeit method for fleets of more than 4 cars: deduction of 35%

Methods 1 and 2 can be used alternatively, if opted to apply method 3, it is applicable for all cars for a period of 3 years. This implies that if your company decides to apply the forfeit method, it will add another cost of +/- 1.5 to 2% to the TCO of the fleet.

For fleets with lots of professional kilometers (sales reps, technicians, etc.) it is worthwhile to prove the professional kilometers (gain of +/- 220 EUR/year: 15% (50%-35%) of 21% of 70% of 10000 EUR). Using telematics for this would add to the business case of measuring and improving driving behavior.

Based on the above we advise you to calculate the effect for your Belgian fleet and take appropriate measures in order to limit the extra cost. Email Bart Vanham for more information.