VAT adjustment: why deducted VAT sometimes has to be repaid
Written by Ilias Aarrass7 min read · Published on · Last reviewed on 
In short
VAT on an asset is only final after five years, ten for property: if use in a year deviates by more than ten percent, you adjust a fifth or a tenth of the VAT you deducted.
- Ordinary costs are not covered; it only concerns assets you depreciate.
- Switching to the small business scheme settles the remaining years at once, unless the amount stays under € 500 in that financial year.
- Since 1 January 2026 a five-year adjustment term also applies to renovation services on property from € 30,000.
- You process the correction in the final VAT return of the financial year, not in a separate return.
Most entrepreneurs think the VAT on a purchase is settled once they have reclaimed it. For ordinary costs that is true. For investments it is not: there the tax authorities keep watching for years. If you later use an asset differently than at purchase, for example more for exempt turnover or because you switch to the small business scheme, you must repay part of the VAT you deducted. That is called adjustment. It is one of those rules freelancers only discover when an assessment lands, while it is quite manageable.
Which purchases are covered
The adjustment rules apply to capital goods: business assets you depreciate. Think of a van, machines, substantial tools, a camera kit, a trailer or business premises. Ordinary costs such as a phone plan, fuel, office supplies and advisory fees are not covered; that VAT is final immediately.
The term depends on the type of asset. Movable assets are tracked for five years: the year of first use plus the four following years. Immovable property is tracked for ten years: the year of first use plus nine. Since 2026 a five-year adjustment term also applies to major renovation services on property from 30,000 euro per service, aimed at stopping short-stay letting structures.
| Type of spending | Term | Adjusted per year |
|---|---|---|
| Ordinary costs (not a capital asset) | No adjustment | VAT is final immediately |
| Movable asset (van, machine, equipment) | 5 years | 1/5 of the VAT |
| Immovable property (business premises) | 10 years | 1/10 of the VAT |
| Renovation service from € 30,000 (from 2026) | 5 years | 1/5 of the VAT |
How to calculate an adjustment
At purchase you deduct VAT according to the use you expect at that moment. At the end of each year within the term you look back: how did you actually use the asset that year? If use deviates by more than ten percentage points from the year of purchase, you adjust one fifth or one tenth of the VAT that year. If the deviation stays within ten percent, you do nothing. Private use of a car does not run through this: you correct that separately each year, see VAT and private car use.
Worked example: a machine partly used for exempt work
- Machine purchase
- € 30,000 plus € 6,300 VAT
- Use in year 1
- 100% taxed revenue, so € 6,300 deducted
- Use in year 3
- 70% taxed, 30% exempt
- Adjustment in year 3
- 1/5 of € 6,300 = € 1,260, of which 30% repaid
- To be repaid
- € 378 in that year's final return
Result: If use stays the same in years 4 and 5, you repay 378 euro again in those years. If the machine runs fully for taxed work again, no adjustment is due for those years.
The three moments where it goes wrong
In practice an adjustment almost always stems from one of three situations. Spot them in time and you calculate the amount yourself rather than hearing it through an assessment.
You switch to the small business scheme
Joining the small business scheme means you perform exempt supplies and lose your right to deduct. If you are still within an investment's adjustment term, you repay the VAT for the remaining years in one go, unless that amount stays under 500 euro per year. So if you bought an expensive machine last year, joining the scheme can cost you thousands.
You sell or withdraw the asset
Sell within the term and the remaining years are settled in one go in the year of sale. If you sell with VAT, the asset counts as fully taxed use for the remaining years and you often get VAT back. Move it to private use and it works the other way, see moving an asset to private use and selling a company car.
Part of your turnover becomes exempt
If you start providing exempt services alongside taxed work, for example care or education, you use your equipment partly for turnover without VAT from then on. Your deduction from the purchase year no longer fits and you adjust to the new ratio. See also exemption versus zero rate.
Keeping track without hassle
You need no complicated system for this. Keep a simple list of every investment above a few hundred euro, with the date of first use, the VAT deducted, the usage percentage in the first year and the year the term ends. Run through that list once a year at your year-end close; the correction goes into the year's final VAT return, together with the private car use correction.
Keep that list with your annual figures. In an audit it is the first thing an inspector asks for when spotting a large investment, and a complete overview saves you a discussion. It also falls under your retention obligation: for property that even runs for ten years.
Frequently asked questions
Does adjustment apply to my 900 euro laptop?
Only if you capitalise it as an asset and depreciate it. Book it straight to costs and there is no adjustment. Where the line lies is explained in capitalise or deduct immediately.
What if I stop trading within five years?
On cessation you settle up over the assets you take into private use or sell. The remaining adjustment years are then dealt with in one go. Factor that into your calculation when stopping or pausing.
Do I report an adjustment in a separate return?
No, you process the correction in the final VAT return of the financial year. If you forget and the amount is substantial, you still correct it with a correction return.
Does the ten percent limit apply per year or over the whole term?
Per year, and you always compare with the use in the year of first use. So you skip a year with a small deviation, even if the next year does require an adjustment.
Sources
- Adjusting VAT deduction on capital goodsBelastingdienst · belastingdienst.nl
- Adjustment for investment services from 2026Belastingdienst · belastingdienst.nl
- Adjusting VAT deduction under the small business schemeBelastingdienst · belastingdienst.nl
Sources checked on
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
