VAT on company car from foreign employer: what changes?

Are you a foreign employer and do you provide a company car to an employee living in Belgium? If so, you may have to pay Belgian VAT. In a recent circular, the Belgian tax authorities clarified in which situations this is the case. We summarise the main points for you. 

Main conditions 

When certain conditions are met, the tax authorities consider the provision to be a so-called ‘B2C rental’:  

1. The company providing the vehicle is not established in Belgium;  
2. The staff member lives or resides in Belgium;  
3. He may also use the vehicle for private purposes;  
4. This for a period of more than 30 days;  
5. The vehicle is provided for valuable consideration. 

That rental is then deemed to take place where the user is established, being in Belgium. Consequently, Belgian VAT is due on this, with the normal value being the minimum taxable amount. 

Some issues need clarification. 

Staff member 

By staff member, we mean not only the employees with whom the company has an employment agreement, but also the managers and directors who have a current account with the company. 

For valuable consideration 

According to the tax authorities, the provision is made ‘for valuable consideration’ by the following ‘contributions’ by the user:  

• payment for the use of the car by the staff member to the company;  
• withholding of part of the remuneration by the company;  
• debiting of the current account of the manager, director, etc., up to the amount of the agreed remuneration;  
• a choice by the staff member between various benefits offered by the company, with the right to use the company car implying a waiver of other benefits. 

Taxable amount 

In principle, VAT is due on the remuneration ‘paid’ by the staff member to the employer. Please note that the remuneration is deemed to be VAT inclusive. But a minimum taxable amount does apply. VAT will be due on at least the normal value. The circular explains how to calculate that normal value. 

Declaration and payment of Belgian VAT 

To declare and pay Belgian VAT, the foreign employer will in principle have to register for VAT in Belgium and submit periodic VAT returns. By way of derogation, the VAT due can be declared and paid through the OSS (one-stop-shop) system. 

As of when? 

The Belgian tax authorities state that, in principle, you should apply these rules retrospectively. But in practice, they accept application from 1 July 2021. This is the date coinciding with the implementation of the OSS system. 

Conclusion 

Administrative Circular 2023/C/72 clarifies the VAT obligations for foreign employers who provide company cars to staff members residing in Belgium. When the provision exceeds 30 days and is for valuable consideration, foreign employers must pay Belgian VAT. In that case, foreign employers must retroactively regulate their VAT situation from 1 July 2021 via a One Stop Shop declaration or via a normal VAT registration in Belgium. 

It is clear that providing company cars to Belgian employees in a cross-border context can lead to VAT obligations in Belgium and additional complexity. 

If you have any questions about these rules, contact our VAT specialists. 

Written by Hans Philips and Michiel Van Chaze.