Is it possible to buy a small van and claim back the VAT?
For many business owners, buying a small van is a logical step towards running their business efficiently. But as soon as the purchase is on the cards, an important question quickly arises: can I claim back the VAT? The answer depends on a number of specific factors, and it’s worth understanding these properly before making a decision.
In this article, we answer the most frequently asked questions about VAT deduction when purchasing a small van. From the basic rules to common mistakes: you’ll find everything you need here to ensure you’re well prepared before making your purchase.
What is the VAT deduction when buying a van?
VAT deduction on the purchase of a van means that, as a VAT-registered business, you can claim back the VAT paid on the purchase price via your VAT return. You pay the VAT to the supplier first, but then offset this amount against the VAT you charge your own customers. On balance, you do not end up paying the VAT yourself.
This right to deduct input VAT is set out in the Turnover Tax Act. The idea behind this system is that VAT is a tax on the end consumer, not on businesses. If you use the van for business purposes, you are not an end consumer and, in principle, you are entitled to a refund of the VAT you have paid.
How does input VAT work in practice?
When you buy a small van from a seller who is liable for VAT, the VAT amount is shown separately on the invoice. You should include this amount as input VAT in your VAT return. The tax authorities will then offset this against the VAT you have paid yourself. If your input VAT exceeds your output VAT, you will receive a refund of the difference.
It is important that you keep the invoice in a safe place and that it meets the legal requirements for a VAT invoice. If any information is missing from the invoice, the tax authorities may refuse to allow the deduction.
When are you entitled to a VAT deduction on a small van?
You are entitled to a VAT deduction when purchasing a small van if you are a VAT-registered business and use the van for business purposes. The tax authorities impose three conditions in this regard: you must be a VAT-registered business, you must use the van for VAT-taxable activities, and you must have a valid VAT invoice.
A small van is generally classified as a delivery van. The Tax and Customs Administration applies specific criteria to determine whether a vehicle is classified as a delivery van. This distinction is relevant because delivery vans are treated more favourably than passenger cars when it comes to VAT deduction.
What are the criteria for a delivery van according to the tax authorities?
The Tax and Customs Administration classifies a vehicle as a delivery van if it meets technical requirements regarding load space and interior layout. Broadly speaking, the load space must not be fitted out for the carriage of passengers, and the vehicle must be intended primarily for the carriage of goods. A double-cab van This can sometimes be a borderline case, as it carries both passengers and goods.
Additional rules apply to double-cab commercial vans. The Tax and Customs Administration assesses whether the load compartment is larger than the space for the driver and passengers. If this is the case and the van meets the other technical requirements, the vehicle may still be classified as a delivery van. It is advisable to check this in advance using the registration certificate or the vehicle documentation.
How does VAT deduction differ between a van and a passenger car?
The main difference is that, for a delivery van used exclusively for business purposes, the full VAT is deductible. For a passenger car, there is a restriction: if the car is also used privately, you must apply a correction to the VAT deduction. This makes the van more tax-efficient for business owners who use a vehicle purely for business purposes.
In the case of a passenger car, the Tax and Customs Administration applies a private use adjustment if the vehicle is also available for private purposes. This applies even if you do not actually use the car privately, but could choose to do so. The adjustment amounts to a fixed percentage of the list price, which can add up to a considerable sum on an annual basis.
What if you also use a van for private purposes?
If you also use a van for private purposes, you must also apply an adjustment to your VAT deduction. The tax authorities apply a flat-rate adjustment for this, unless you keep a comprehensive mileage log showing the percentage of business and private mileage. With an accurate mileage log, you can limit the adjustment to the actual private use.
Keeping a log of your journeys takes discipline, but it can save you a considerable amount of money over the course of a year. Especially if you’re thinking of buying a small van and know that it will be used almost exclusively for business purposes, it’s well worth keeping a proper record of your journeys.
How much VAT can you claim back on a small van?
If a small van is used entirely for business purposes, you can claim back the full 21% VAT amount stated on the purchase invoice. For a van with a purchase price of 20,000 euros excluding VAT, this amounts to 4,200 euros, which you will receive back via your VAT return. The exact amount depends on the purchase price and the percentage of business use.
In the case of mixed use – that is, both business and private – you calculate the deductible VAT based on the proportion of business use. If you use the van 80% for business and 20% for private purposes, 80% of the VAT paid is deductible. The remaining 20% is your responsibility as non-deductible VAT.
Does VAT deduction also apply to additional costs?
Yes, the VAT deduction does not apply solely to the purchase price of the van itself. In principle, VAT on costs directly related to the business use of the van is also deductible. These include fuel, maintenance, repairs and accessories used for business purposes.
However, you must be able to prove that the vehicle is used for business purposes. Keep your invoices in a safe place and ensure it is clear that the costs relate to the vehicle used for business purposes. During an audit, the tax authorities may ask for proof that the costs are business-related.
Does VAT deduction also apply when leasing a small van?
Yes, VAT deduction is also possible when leasing a small van. With an operating lease, you pay a monthly lease instalment that includes VAT. That VAT is deductible as input tax, provided the van is used for business purposes. With a finance lease, similar rules apply to those for a purchase, as you are effectively buying the vehicle yourself under that arrangement.
Choosing a electric company car Leasing offers additional benefits in this regard. As well as the VAT deduction on the lease instalments, you may benefit from tax advantages relating to the additional tax liability and subsidies for electric driving. The VAT rules for electric vans are the same as those for conventional vehicles, but the overall cost may be lower due to lower energy costs and any subsidies.
What are the VAT rules for operating leases?
With an operating lease, the leasing company is listed as the owner of the vehicle on the registration certificate. You pay a monthly lease instalment, including VAT. You claim this VAT as input tax on your VAT return, based on the percentage of business use. The leasing company will provide you with a monthly invoice for this that complies with VAT requirements.
Please note that the private use adjustment may also apply in the case of a lease. If you also use the leased van for private purposes, you must apply the same adjustment rules as you would for a purchased van. The type of lease does not alter the VAT rules relating to private use.
What mistakes should you avoid when claiming VAT on a van?
The most common mistakes when claiming VAT deduction on a van are: failing to keep a valid VAT invoice, incorrectly classifying the vehicle as a delivery van, failing to keep a logbook for mixed use, and forgetting to apply the private use adjustment. Any of these errors could result in an additional tax assessment or a fine from the tax authorities.
Good record-keeping is the key to preventing problems. This may sound obvious, but in practice, things often go wrong in this area. Below are the mistakes you’d be best to avoid:
- Keeping an incomplete invoice: A VAT invoice must meet specific requirements, such as the seller’s VAT number, an invoice date and a clear description of the vehicle. If any of these details are missing, the deduction may be refused.
- Incorrect vehicle classification: Not every vehicle that looks like a van is classified as a van by the tax authorities. Check the classification on the vehicle registration certificate before claiming VAT.
- No journey log for mixed use: Without a logbook, the tax authorities will apply a flat-rate adjustment that is often higher than the actual private use. Keeping an accurate logbook can save you money.
- Forgot to apply the private use adjustment: If you also use the van for private purposes and do not make an adjustment, you run the risk of being charged additional tax following a tax audit.
- Claiming VAT on a margin purchase: If you buy a second-hand van under the margin scheme, no VAT will be shown on the invoice and there will be nothing to claim back. This is a common misconception when buying second-hand vehicles.
Are you unsure about the classification of a vehicle or the correct application of VAT rules? If so, consult a tax adviser or accountant before submitting your return. It is better to be safe than sorry.
How we help you choose the right van
We understand that choosing a small van isn’t just about the vehicle itself, but also about the tax and practical implications for your business. Whether you’re looking for a compact van for everyday use, a double-cab commercial van for shift work, or an electric commercial vehicle on a lease as a sustainable choice for the future: we’re happy to help you find the right solution.
What we can do for you:
- Advice on choosing the right vehicle based on your usage and tax situation
- An overview of which vehicles in our stock are classified as delivery vans for VAT purposes
- Flexible options for purchase, finance or leasing, tailored to your business needs
- Personalised support from the initial consultation through to delivery
- A wide range of new and used commercial vehicles, including electric vehicles and special-purpose models
Would you like to know which small van is best suited to your situation and how to make the most of the VAT deduction? If so, please get in touch with us or take a look at our current offer. We’re happy to help you with honest advice and a transparent approach.
