Reblog: Dutch Supreme Court rules on VAT correction less environmental friendly cars

On April 12, 2013 the Dutch Supreme Court (12/01372) has ruled that, with respect to the VAT correction for the private use of company cars , entrepreneurs with less environmental friendly company cars cannot use the same favorable tax treatment that applies to environmental friendly company cars.

Until July 1, 2011 the VAT correction for the private use of company cars was linked to the rates applicable for wage and income tax. For environmental friendly company cars (low CO2 emission) the rate was lower than for less environmental friendly company cars (higher CO2 emission). Entrepreneurs with less environmental friendly company cars wanted to apply the same favorable tax treatment as for environmental friendly company cars relying on the principle of equality. The Dutch lower Court ruled in their favor.

The Dutch Supreme Court however has now ruled that the favorable tax treatment of environmental friendly company cars is in principle a breach of the European VAT legislation. If this rule would be extended to less environmental friendly company cars, this would lead to an even larger breach of the European VAT legislation. According to the Dutch Supreme Court the principle of equality does not reach that far.

Please note that as of July 1, 2011 for VAT purposes a new policy was introduced that does not make this distinction in rates anymore for environmental friendly and less environmental friendly company cars.

Via Netherlands – Supreme Court rules on VAT correction less environmental friendly cars – VAT Resource.

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