Belgium: VAT deduction for mixed-use cars; adjustment to calculation for 2020
Belgium: VAT deduction for mixed-use cars
Relief is provided to taxpayers with regard to input value added tax (VAT) deductions related to cars used for personal and business purposes for 2020.
In general, there are three methods available to determine the business use of cars (for VAT purposes) and the right to deduct input VAT on expenses incurred in relation to these cars:
- Method 1—The VAT-able person keeps a daily journey or log.
- Method 2 “semi-presumptive”—The business use is calculated on the basis of a specific formula developed by the tax authorities. The formula determines the percentage of personal use, from which the percentage of business use can be determined.
- Method 3 “presumptive”—The business use is determined at a presumptive rate of 35%.
Relief for calendar year 2020
Due to the exceptional situation created by the coronavirus (COVID-19) pandemic-related lockdown and teleworking by many employees, the formula in the “semi-presumptive” calculation method is skewed.
Therefore, VAT payers who normally use Method 2 can exercise their right to deduct under the general presumptive rate of 35% (of Method 3). VAT-able persons then may combine the “semi-presumptive” method and the “presumptive” method, despite the fact that this is normally not allowed. Except for the timing relating to the application of Method 3 (see below), the other conditions for the application of Methods 2 and 3 remain unchanged.
These measures only apply to calendar year 2020.
Relief for calendar year 2021
For calendar year 2021, the concerned VAT-able persons can use again the “semi-presumptive” method and do not have to take into account the obligation to use the general presumptive rate of 35% for at least four calendar years.
Read a March 2021 report prepared by the KPMG member firm in Belgium
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