Recently, the Dutch Supreme Court has ruled that the right of deduction on the private use of company cars should be revised.


A Dutch company had made available cars to its employees, for which the employees paid with their own contributions. The company had to pay VAT on the personal contributions, but these payments may be deducted in the VAT return. However, with respect to the Dutch Decree, the so-called Besluit uitsluiting aftrek omzetbelasting or BUA, a correction must be declared for the private use of the cars. In addition, the company had opted to use the approval to not declare VAT throughout the year and instead declare VAT at the end of the financial year, based on a fixed percentage.

The Dutch Tax Authorities argued that a BUA correction should be made to the personal contributions paid, despite the fact that these payments were cost-neutral.


According to the Dutch Supreme Court, the Dutch Tax Authorities have appropriately applied the BUA correction to the private use of company cars.

If the company had opted to declare VAT on the personal contributions throughout the year, it would not have been necessary to declare a correction in the situation where the personal contributions are cost-neutral. Since the company had not kept any kilometer records, the company was unable to prove that the year-end correction should have been omitted.

Furthermore, the obligation to declare a BUA correction is not conflicting to the European VAT Directive in a situation where the personal contribution is not cost-neutral. The Dutch Supreme Court refers in this respect to the consolidated Court of Justice of the European Union (CJEU) cases X Holding and Oracle (C-538/08 and C-33/09), in which the CJEU ruled that the Dutch regulation under the BUA is not contrary to the European VAT Directive.

Finally, the Dutch Supreme Court considered that there is a difference between the VAT treatment of cars owned by entrepreneurs and operational lease of cars. Hence, according to the Dutch Supreme Court, the principles of equality and neutrality are not violated.

In the light of the above, the BUA correction therefore is appropriately applied by the authorities in the case of private use of company cars.