A seemingly simple question yet appearances can be deceptive. Although there are only 4 possibilities – the answer is influenced by a host of variables.
In this blog, some tips on making this mind-bending choice.
VAT and IB or VAT or IB?
First of all, are we talking about VAT, IB or VPB? After all, in the IB and VAT situation, you can choose either form. That choice does not exist for a limited liability company (VPB). There it is either completely private or completely business.
A youngtimer can be favorable for IB and unfavorable for VAT. Conversely, a new fuel-efficient car can be expensive for the IB addition and very favorable again for VAT. This depends on KM records, the year of the car and the original catalog value, among other things. Finally, your personal consumption is also very important. Much private (max 90%) and little business (at least 10%), vice versa or a little in between?
KM registration or not?
The IB addition is inexorable and takes effect from the 500th private KM (retroactively). You’ll soon be stuck with that flat-rate IB addition. Actual KM ratio no longer matters (though capped at actual costs … for IB). The IB addition can be omitted and instead you can charge 19 ct per KM. The actual costs (fuel/maintenance/depreciation) are then no longer deductible.
For VAT, in principle, actual use applies. The Supreme Court recently confirmed that not only a KM administration is required for this break – but that a plausible substantiation using, for example, a statistical calculation can also suffice. Whether that substantiation is plausible again depends on the circumstances of your situation as well as, of course, the substantiation itself.
Flat-rate VAT addition
If no substantiation is available, the flat-rate calculation applies to VAT. To this you should add 2.7% or 1.5% of the list value. This is done in proportion to the period you labeled the car for VAT. Note – even for an old car, you should look at the list value.
Are you buying a car and hate recording KM? Then do yourself a favor and buy a car in December. You may reclaim the VAT in full – and only need to add lump sums for a short period (provided there is no KM administration). In the following year, however, it may pay to pay attention to actual usage again.
What year is the car?
The additional tax liability for cars under 15 years old often kills the IB deduction. An additional tax rate of 25% or 22% quickly creates more additional taxes than actual costs. Fortunately, those in the IB sphere are then capped at actual costs.
For an old car (15 yr>), 35% of the daily value applies. Some cars with previously high list value but relatively low daily value – can soon be driven with a low additional taxable income for personal income tax purposes. The fuel and maintenance deduction quickly exceeds that addition. Whether more cost is ‘always’ a good thing – science is not yet entirely settled….
Residual value achieved or ‘systematic’ depreciation?
Because depreciation is included in the basis for addition – a lower depreciation may result in a lower addition. After all, the addition is capped at the actual cost (including depreciation). Because a book loss or gain is inevitable – (and also does not count toward the basis for additional taxable income), it is wise to properly evaluate the residual value. Is your car worth more on the market than its achieved book value – and can the additional tax credit be reduced by not depreciating? Then stop depreciating for a lower addition. This benefit realizes itself when the car is sold.
Finally, Be well informed which option is best for you. Once chosen, you can never go back. Unless, of course, you are buying a new car or the choice has not yet been irrevocably determined.