For company cars put at the disposalfree of charge, the VAT deduction is limited, as from 1 January 2013, to the business use of the vehicle. In order to determine business use, the VAT administration offers a choice of three methods of calculation:
- logging the journeys made;
- a semi-flat rate system, consisting of a formula with both fixed and variable parameters;
- a flat rate of 35% (requires a minimum of 4 company cars).
Where company cars are put at the disposal in exchange for a payment, up to 50% of the VAT on the vehicle expenses may be deducted. Furthermore, VAT must be paid on the amount of the contribution, and may not be calculated based on a value lower than the normal value. The ‘normal value’ is determined by multiplying the annual car expenses by the percentage of private use of the vehicle that exceeds 50%.
Companies may opt to apply these new rules for 2012 as well.
In addition to a number of simplifications as regards invoicing, electronic invoicing and self-billing, changes were also made to the rules governing VAT liability, effective 1 January 2013.
As from 1 January 2013, the issuing of an invoice no longer triggers VAT liability. Most ERP systems and accounting programmes use the invoice date as the basis for VAT reporting, however. A method of reporting that is now a problem for invoices issued for advances. The reason for this is that in the case of invoices for advances, VAT is liable only at the time of the receipt of the payment or the completion of the service/delivery. In principle it is only at that point that the supplier must pay the VAT, and that the recipient may deduct it.
In order to enable companies to adjust to the new rules on VAT liability, a transitional regime has been adopted whereby the old rules may, in principle, continue to be applied during 2013.