Private use of a company car: how the VAT correction works

Written by Ilias Aarrass7 min read · Published on 18 August 2026 · Last reviewed on 11 September 2026

In short

Without a mileage record you correct private use of a company car once a year at 2.7 per cent of the list price, in box 1d of your final VAT return.

The lower 1.5 per cent rate applies if you could not deduct VAT on purchase, for example with a margin-scheme car, and from four years after the year of first use.
With a complete mileage record you may declare actual private use instead, which is lower if you drive few private kilometres.
For VAT, commuting counts as private, exactly the opposite of the income tax addition.
This VAT correction is entirely separate from the income tax addition: a company car involves both.

Do you drive a company car and also use it privately? Then you have reclaimed VAT on car costs all year, while part of the use was private. That's why you have to make a correction at year-end in your final VAT return. Many entrepreneurs forget this or don't know how it works. This article explains how to calculate the correction.

Why do you have to correct?

You may only deduct VAT to the extent that you use something for business. With a company car you simply reclaim the VAT on fuel, maintenance and the purchase or lease during the year. You then settle the private use in one go, in the VAT return for the final period of the year. Note: this is separate from the addition to taxable income in income tax. Those are two different schemes.

How do you calculate the correction?

There are two routes. If you keep a watertight mileage record, you calculate the actual private use: the private share of your kilometres determines which part of the deducted VAT you pay back. For VAT purposes, commuting counts as private, unlike for the addition to taxable income.

If you don't keep a mileage record, you use the flat rate: 2.7 percent of the car's list price, including VAT and registration tax. Couldn't you deduct VAT on purchase, for example with a margin-scheme car, or has the car been in use for more than four years after the year it was first used? Then the lower flat rate of 1.5 percent applies.

A worked example

Suppose your car has a list price of 30,000 euros and you use the 2.7 percent flat rate. The correction is then 810 euros. You report this amount as VAT payable in section 1d of your final return of the year. For a margin-scheme car at the same price it is 450 euros.

What's sensible to do?

Check each year whether the flat rate or actual use works out better for you. If you drive few private kilometres and already keep records, the actual calculation is often more favourable. Don't forget the correction: in an audit this is one of the first things the tax authorities look at.

A worked example and the exceptions

You make the private-use correction once a year, in the final VAT return. The lump sum is 2.7 per cent of the list price including VAT and BPM; without a mileage log this is the standard route.

Worked example: a car with a € 30,000 list price

Lump sum: 2.7% of € 30,000: € 810
To declare in box 1d of the final return: once a year
From 4 years after the year of first use: 1.5% instead of 2.7%

Result: A margin-scheme car without VAT deduction on purchase also uses the low 1.5 per cent rate, since you only deducted VAT on running costs

Frequently asked questions

How much VAT do I declare for private car use?

The lump sum is 2.7 per cent of the list price including VAT and BPM, per year. From the fifth year after first use, and for cars without VAT deduction on purchase, it is 1.5 per cent.

When and where do I declare the correction?

Once a year, in the final VAT return of the year, in box 1d. If you forget it, you correct with a supplementary return.

Does commuting count as private for VAT?

Yes. That is exactly the opposite of the income tax addition, where commuting is business. Do not confuse the two schemes.

Can a mileage log beat the lump sum?

Yes, then you declare VAT on the actual private share of the car costs. With little private use that is cheaper; see keeping a mileage log.

Does the correction apply to a margin-scheme car?

Yes, but at 1.5 per cent: you had no VAT deduction on purchase, only on fuel and maintenance. With no VAT deduction at all, the correction lapses.

Is this VAT correction separate from the addition?

Yes, entirely. The addition is income tax on the private benefit; the 2.7 per cent is VAT on private use. A company car involves both. See calculating the addition.

Sources

Private use of a company car for VATBelastingdienst · belastingdienst.nl

Sources checked on 11 September 2026

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.