reclaim VAT car rental Belgium

VAT on car rental in Belgium: deduction is often limited, not excluded

VAT on the rental of a passenger car in Belgium can in principle be reclaimed via the portal of the Dutch Tax Administration, but the amount ultimately granted is often lower in practice than the VAT shown on the invoice. The reason is that many EU Member States, including Belgium, have a limitation on the right of deduction for passenger cars — also for their own taxable persons. That limitation carries through into what a Dutch entrepreneur can reclaim via the refund procedure: the refund country applies the same regime as it would apply to a domestic deduction item.

For commercial vans and other business transport without the character of a passenger car, that limitation does not generally apply in the same way, and the VAT on rental can be fully included in the request. The distinction between "passenger car" and other means of transport, and the precise extent of the limitation that Belgium applies, is described in the country-specific requirements of the Dutch Tax Administration. When submitting a request, the rental of a means of transport is classified as a separate cost category and assessed against those requirements, so that only the part permitted by the refund country is submitted.

Basis: Article 4 of the Directive and the Requirements List

Directive 2008/9/EC provides in Article 4 that a Member State of refund may apply the same exclusions and limitations on deduction as apply to its own taxable persons. For Dutch entrepreneurs reclaiming VAT on car rental in Belgium, this means that Dutch rules are not decisive, but Belgian rules are. Which limitation exactly applies to the rental of passenger cars is set out per country in the Requirements for request for VAT refund from other EU Member States of the Dutch Tax Administration; that list serves as the leading source when assessing this cost category.