In case a taxable person makes a car available to an employee, the private use of that company car is subject to the exclusion from the right to deduct input VAT. This private use of a company car should be processed in the final VAT return of the financial year. As of 2008, the value of private use was based upon the CO2 emission of the car. If the CO2 emission of the car exceeds a certain value, a higher percentage will apply.
Recently, the Court of Haarlem and subsequently the Court of Amsterdam ruled that this regime conflicted with EU law, specifically the principle of equality. Therefore, the taxable person can claim for the lower percentage to apply with regard to the VAT correction for the private use of company cars, even if the car does not fall under the category of cars with low CO2 emissions.
As a result, Dutch legislation was amended immediately. The decision of the Court of Haarlem did lead, however, to a huge amount of objections against the filed VAT returns in which the correction of 2011 was processed.
In the view of the Advocate General Van Hilten, the previous regime (in force until 1 July 2011) did entail a policy based on favouritism, as decided by the Court of Haarlem in Amsterdam. However, the Advocate General concluded that even if no objective and reasonable justification exists for the favouritism and that the regime conflicts with the principle of equality, the appeal will not succeed.
From case law, it follows that a claim on the principle of equality can only sort effect after the date on which the Ministry of Finance became clear (not: should have been obvious) that the regime was based on an error of law. In this case, the Ministry of Finance did not become aware of the error of law until the decision of the Court of Haarlem after which it amended the error immediately.
Should the Supreme Court of Justice decide in line with the conclusion of the Advocate General, the taxpayers who have filed a letter of objection against their VAT returns will likely lose their claim.