Company car taxation VAT
March 11, 2013 | 25,00 EUR | answered by Oliver Burchardt
Company car taxation in value added tax for GmbH with 75% VAT-exempt and 25% VAT-taxable turnover. Car purchase 25,000,- plus 19% VAT. According to the employment contract, the GmbH provides the car for private use to the managing director-shareholder. What VAT does the GmbH have to pay, what can it claim as input tax as a one-time and ongoing deduction?
Dear inquirer,
Thank you for your inquiry, which I would like to answer as part of an initial consultation.
The GmbH itself has a right to reclaim input tax of 25% of the VAT paid on the purchase of the motor vehicle. The same applies to all other services acquired for the vehicle. The rules that apply to other purchases or service acquisitions remain unchanged.
However, you must separate the VAT on the provision of the motor vehicle to the managing director. In this case, the GmbH must declare a taxable service. For simplification purposes, the VAT on this service is calculated similarly to the taxation of the benefit in kind.
You must base the VAT on 1% of the gross list price without VAT (e.g. €21,008 for a gross list price of €25,000). This base can be reduced by 20% to account for the fact that certain expenses related to the motor vehicle do not include VAT (e.g. insurance costs).
You must apply the 19% tax rate to the reduced base and declare and remit the VAT calculated.
I hope this information is helpful to you.
Best regards,
Oliver Burchardt
Tax Consultant
