Belgium: Temporary tolerance for VAT deduction for mixed-use cars (COVID-19)

A temporary tolerance in the context of coronavirus regarding VAT deductibility of mixed-use cars

Temporary tolerance in context of COVID-19 regarding VAT deductibility of mixed-use cars

The Belgian tax authorities published Circular 2022/C/31 (17 March 2022) concerning a temporary tolerance in the context of the coronavirus (COVID-19) pandemic regarding the value added tax (VAT) deductibility of mixed-use cars (i.e., cars used for personal and business purposes). 


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 COVID-19 pandemic-related lockdown and teleworking by many employees, the formula in the “semi-presumptive” calculation method is skewed.

Therefore, VAT payers that 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. Read TaxNewsFlash

Relief for calendar year 2021

In this latest guidance, the relief for calendar year 2020 has been extended to calendar year 2021.  

Relief for calendar year 2022

For calendar year 2022, 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 2022 report prepared by the KPMG member firm in Belgium


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