16 October 2013

Belgian employers granting a company car to staff residing in Germany, can be confronted with German VAT obligations. The German tax authorities recently issued a VAT circular in this respect.

Vehicles for rent – place of supply

Whenever a passenger car is rented out for a term of over 30 days the service is for VAT purposes deemed to take place where the private individual is domiciled (i.e. place of residence or normal abode).

This specific rule for the place of supply only took effect on 1 January 2013, but was announced already in 2009. Leasing companies were thus much earlier aware of the practical impact of this rule: a VAT registration duty in each EU member state where the lessee of the vehicle is residing (in case of long term lease).

The German tax authorities now lay down explicitly that the private use of company cars (free of charge) qualifies as a long term rental of transport means, to which apply the same rules. This implies that in the case a foreign company “rents out” a company car to a German employee, German VAT is due by the foreign company.  

Other staff

These principles normally apply to all enterprises granting company cars to foreign employees. However, it depends on local VAT legislation whether additional VAT obligations will arise.

The question now arises whether these rules are in line with European VAT legislation, as the new German standpoint can lead to double taxation. Some member states are already assessing further steps (e.g. Luxembourg).  


Should you have any further question or should you require a personal advice with respect to the impact of these rules on your company, please contact your usual contact person at BDO or you may send an email to [email protected] for the attention of one of the members of the Competence Center VAT: 

  • Erwin Boumans, 02/778.01.00
  • Pascal Dauw, 09/210.54.10
  • Kaatje Bondewel, 02/778.01.00
  • Brigitte Braeckmans, 03/230.58.40
  • Joëlle Teuwen, 081/ 20 87 87