VAT car or margin car

What is it and how does it work?

It is important for entrepreneurs to know whether a used car is a so-called VAT car or a margin car . This is because in the case of a VAT car, VAT still has to be paid on the purchase price when purchasing and can usually also be reclaimed. With a margin car, the price always includes the previously paid VAT.

Reclaim VAT

When a company or entrepreneur buys a new car or VAT car, VAT is also included in the invoice in addition to the purchase price. This must also be paid, but in almost all cases it can be fully reclaimed. As soon as the entrepreneur sells the car again, he must again charge VAT on the sales amount. If the car is purchased by another entrepreneur, he or she can reclaim the VAT. In the case of financial leasing of a VAT car, the VAT must be paid in one go. Entrepreneurs can also reclaim this VAT.

What is the difference between a VAT car and a margin car?

VAT is levied on every new car delivered in the Netherlands. A private individual simply has to pay that VAT. Entrepreneurs too, but they can usually reclaim this VAT from the tax authorities. As long as a VAT car only has business owners who pay and reclaim VAT upon purchase, it also remains a VAT car. Once a car has been owned by a private individual, it is and remains a margin car. The VAT can then no longer be reclaimed. For example, if a VAT car is traded in at a garage and then resold to a private individual, it automatically becomes a margin car.

VAT correction for private use of company car

If someone uses a company car for private purposes (including commuting), VAT must be paid for the part that the car was used privately. If there is a consistent mileage registration, the exact amount of VAT to be paid can be calculated via the calculation tool on the Tax Authorities' website. If there is no mileage administration, the flat rate for private use is 2.7% of the list price of the car, including VAT and BPM. It does not matter whether the car has been purchased or whether financial lease or operational lease is used. In the case of a margin car, or a car that has been in use by the company for more than 5 years, the fixed amount is 1.5%.