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Netherlands: Private use of company cars, clarified VAT treatment

Netherlands: Private use of company cars, clarified VAT

In the final Dutch value added tax (VAT) return of 2019, a VAT correction may be required concerning the VAT deduction exclusion decree and the private use of company cars.


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The decree precludes the recovery of VAT (also referred to as input VAT) on promotional gifts and staff benefits if provided free of charge or below cost by the business. It is irrelevant whether the business had a commercial reason for providing the gifts and staff benefits (for example, if provided for client management, staff commitment, etc.).

The rationale for not allowing input VAT to be recovered is based on the fact that these costs, while business-related, are consumption-oriented, and VAT is a tax specifically designed to tax consumption.

A threshold of €227 per recipient applies. It is not necessary to make an adjustment if the total purchase and development costs (the cost price) of the benefits are less than €227 (excluding VAT) per annum per recipient. This is a final threshold; if the threshold is exceeded, the input VAT on provisions within the threshold amount are non-recoverable.

Read a January 2020 report prepared by the KPMG member firm in the Netherlands

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