Preventing fines by complying with VAT regulations for private use of company vehicles

How Numarics helped a client overcome complex tax regulations

What happened?

A customer used a company vehicle for private purposes and posted all vehicle costs to the company account. This information was not shared with the accountant, which resulted in a violation of tax legislation. The law provides that, when using a company car privately, 0.9% of the total value is to be recorded as a sale subject to sales tax. This sales tax must be paid and included in the owner's payslip.

Challenges

The customer's failure to report private use of the company car and associated costs resulted in non-compliance with VAT regulations. This mistake exposed the customer to significant penalties and additional tax obligations.

Our Approach

Numarics identified the undeclared private use of the company car through a thorough review of the customer's expense reports. We then calculated the necessary adjustments to ensure compliance with VAT regulations by recording 0.9% of the total value of the vehicle as a VAT-subject sale. In addition, we gave the customer instructions on how to correctly report these costs in the future.

Results

By resolving the compliance issue, Numarics has helped the customer avoid potential penalties and additional tax obligations. The customer now keeps accurate records of private use of company property, which ensures continuous compliance with tax regulations.

Conclusion

This case study shows the importance of accurate reporting and tax compliance. Numarics' proactive approach not only solved the immediate problem, but also gave the customer the knowledge and tools to remain compliant in the future.