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Belgian VAT circular: Impacts for residents with foreign employer-provided cars

5 September 2023

Input newsletter

On 4 September 2023,  Belgian VAT authorities issued their circular 2023/C/72 regarding Belgian VAT treatment of company cars provided by foreign employers to employees residing in Belgium. Employers, including Luxembourgish ones, should assess if their car policies to determine if the cars they put at disposal of their employees are in scope of these new rules and take the necessary actions.


Traditionally, an employer-provided car, provided to an employee, at least partly, for private purposes, was considered as “self-supply” subject to the VAT in the Member State of the employer, no matter the employee’s Member State of residence.

This interpretation has evolved since case C-288/19where the European Court of Justice (CJEU) ruled that the provision of a car by an employer to a staff member should be considered as hiring a means of transport and made against remuneration when the following conditions are met:

a) The employee provides payment for the use of the car; or,
b) The employee gives up a part of their remuneration as consideration for the car; or
c) The ability to use that vehicle is contingent on the employee forgoing other benefits; and
d) The employee has the right to use the car for private purposes and to exclude other persons from using the car, for an agreed period of more than 30 days2, and the car remains permanently at the employee’s disposal, including for private purposes.

In principle, this service is taxable in the Member State of the employer. However, pursuant article 56.2. of Directive 2006/112, it becomes taxable in the Member State of residence of an employee when different from the Member State of the employer. Therefore, a Luxembourg employer providing such a service to staff members residing in Belgium, France or Germany must consider VAT payment in these three countries in addition to its obligation in Luxembourg.

Should these conditions not be met, the employer-provided vehicle (also called put-at-disposal) would, in principle, be considered as a self-supply subject to VAT in the Member State of the employer.

For more detailed comments regarding the CJEU decision and its implementation in Luxembourg, please refer to our previous newsletters:

The Belgian circular

This new Belgian circular provides final, precise explanations on how to apply VAT in the specific case of foreign employers putting vehicles at disposal of Belgian resident employees. Below, we focus on what we deem is most important. However, we must emphasize that the circular provides many detailed rules and that a careful analysis is thus necessary.

Concerned persons

Please note: in addition to employees, managers and directors of companies who have a current account with the company are also in scope of the circular.

The taxable basis

The taxable basis is the value of the payment by the employe or the normal value, which is based on the expenses made by the employer. This is either the rent paid plus the other costs when the employer leases the car, or one fifth of the acquisition price of the car plus the other costs when the employer owns the car. Multiply this basis by the difference between the VAT deduction right of the employer and the percentage of professional use of the car, which could be calculated based on three methods, including the general lump sum method of 35%. An employer with a full VAT deduction right will thus have to pay the Belgian VAT on 65% of the taxable basis (100% – 35%).

Entry in force

Regarding entry in force, the circular reminds that CJEU decisions would imply that the principles should be in force from 1 January 2013 (introduction of article 56.2. in the Directive 2006/112), and that Belgian VAT is due from this date, when the employer-provided car meets the conditions of the QM v. Finanzamt Saarbrücken decision.

However, the circular fixes 1 July 2021 as the more realistic pivot date. This dates presents a practical advantage as it coincides with the date when the use of one-stop-shop (OSS) was enlarged to supply of services. This minimizes the need to register and file VAT returns in Belgium.

Our comments

Employers should assess if employer-provided (or put-at-disposal) company cars for employees residing in Belgium are considered to be made against remuneration and thus subject to Belgian VAT. In this respect, the circular indicates that it is necessary to examine each car policy and that the concept of rent should be broadly understood. We should emphasize again that the circular provides many detailed rules, which you should carefully analyze.

The Deloitte Belgium and Luxembourg indirect tax teams remain at your disposal to discuss the potential impacts on your organization.

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1 C-288/19, QM v Finanzamt Saarbrücken, 20 January 2021.
2 If the agreed period is less than 30 days and all other conditions of the decision met, the VAT is due in the Member State where the car is put at disposal of the employee.

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