The Belgian Tax Authorities published Circular 2022/C/31 (dated 17 March 2022) concerning a temporary tolerance in the context of Covid-19 for the VAT deductibility of mixed-use cars (see NL / FR). This tolerance concerns the application of the ‘semi-presumptive’ method which can be applied to estimate the business use of cars. The Circular reinforces the tolerance provided for calendar year 2020 (NL / FR) and extends it to calendar year 2021.    

General rules

The right to deduct input VAT incurred on the supply, intra-Community acquisition and the import of cars and related services, is limited to business use when these cars are also used for private purposes (i.e. mixed-use cars). Furthermore, the deduction may not exceed 50% of the VAT paid. To determine the business use of these cars and the deductible VAT, the following three methods are available:

  • method 1:  the VAT taxable person keeps a daily journey-administration;
  • ‘semi-presumptive’ method 2: the business use is calculated on the basis of a specific formula developed by the Tax Authorities, whereby the % private use = ((distance home-work x 2 x 200 + 6000) / total distance) x 100. The % business use is then equal to 100% - the % private use.
  • ‘presumptive’ method 3: the business use is determined at a presumptive rate of 35%. 


Due to the restrictions triggered by the Covid-19 pandemic in 2020 and 2021 (e.g. lockdowns, compulsory teleworking), the actually driven kilometers by cars have dropped. Consequently, VAT taxable persons that were hit by the restrictions and that normally apply the ‘semi-presumptive’ method 2, may be disproportionally disadvantaged in the estimation of deductible VAT under this method. The presumptions embedded in method 2 indeed maintain (i) a 200 day work year wherein the employee would drive to work (home-work distance is deemed private for VAT purposes) and (ii) a 6.000 km purely private journeys as basis without considering the impact of the Covid. To mitigate this effect, VAT taxable persons that would normally use the ‘semi-presumptive’ method 2 are permitted to use the ‘presumptive’ method 3 (35%) during calendar years 2020 and 2021. Furthermore, these VAT taxable persons are permitted to combine the 'semi-presumptive' method 2 and the ‘presumptive’ method 3 during the concerned calendar years, despite the fact that this is normally prohibited.

The other conditions for the application of methods 2 and 3 remain unchanged. As from calendar year 2022, VAT taxable persons that applied the above tolerance can again use the ‘semi-presumptive’ method 2 again. This means that they do not need to take into account the obligation to use the ‘presumptive’ method 3 (35%) for at least four calendar years, as determined in Circular AAFisc No. 36/2015 (No. E.T.119.650).

How can KPMG help you?

Determining the correct amount of deductible VAT can be a complex and time-consuming exercise. Nevertheless, it is important that the calculations are always correctly made and well-substantiated to safeguard business interests and prevent unnecessary disputes in case of future tax audits. If you have any questions on the above or otherwise about VAT, do not hesitate to contact us.