Private use - Insight into your VAT adjustment 2020

17/12/20

The VAT adjustments for private use of goods and services, bought for business purposes by a business but (partly) used for private purposes, need to be calculated and included in the last VAT return of each financial year. In the publication ‘Private use – Insight into your VAT adjustment 2020’, we give an overview of the adjustments that are covered by the current relevant VAT legislation.

We have included some particular points of attention regarding the consequences of COVID-19 pandemic, such as the VAT consequences of donations and facilities for working from home.

In general, we see a development in case law on the VAT adjustment for private use in favor of entrepreneurs. This seems to indicate that in certain cases the Dutch Tax Authorities tends too quickly towards excluding deductions as soon as private enjoyment by an employee is observed.

However, the Supreme Court mainly looks at the necessity for the company. Certainly in the case of increased provision of home work facilities in the corona crisis, but also, for example, in the provision of company buses (of course outside the BUA, but with the same test), it remains desirable for the Dutch Tax Authorities to primarily keep the company’s interests in mind in special situations.

The following adjustments are discussed: total exclusion of VAT deduction on hospitality/catering costs, the VAT Deduction Exclusion Decree (‘Besluit uitsluiting aftrek omzetbelasting 1968’ - further: BUA), VAT on deemed supplies such as the private use of a company car, and VAT adjustment for the private use of immovable property labelled as a business asset.

In practice, the VAT adjustment for the private use of a company car usually constitutes the most significant financial interest. Therefore, in this publication we pay specific attention to this adjustment.

This publication does not provide for an exhaustive overview of all relevant rules and regulations. If you would like more information on VAT adjustments and the possibilities for your business, please contact your PwC Indirect Tax advisor who will be happy to assist you further.