Questions and Answers
Reclaiming VAT on a Company Car
I recently purchased a new car for my VAT registered business and the car dealer charged me VAT. I have been told I cannot reclaim this VAT. Is this correct?
In general no VAT can be reclaimed on the purchase of a car for personal use. However all VAT can be claimed on the purchase of commercial vehicles such as vans and trucks.
In your particular case a new provision that was introduced in 2008 may be of benefit. This new rule allows for a 20% VAT deduction for VAT incurred on 'qualifying' cars. You can qualify for this deduction if you use your car at least 60% of the time for business purposes and provided the car is first registered after 01 January 2009. A qualifying car is specifically defined on the Revenue commissioners website but it is essentially any motor vehicle with a level of CO2 emissions of less than 156g/km. As such, it is important to check when buying a new car that it will qualify.
A claw-back of the VAT reclaimed would arise if you sell your car within two years of acquisition.
It should also be noted that no VAT can be reclaimed on petrol but VAT can be reclaimed on diesel.
If you would like to find out more about VAT returns please click here.
Frequently Asked Questions
If a business's turnover exceeds €80,000 (for businesses supplying goods) or €40,000 (for businesses supplying services only) it must register for VAT.
Budget 2025 announced a change to the VAT thresholds. For those selling products the new cut off point is €85,000 and for those delivering services it is €42,500. The new thresholds come into effect from 01 January 2025.
A VAT Registration Number is mandatory for businesses exceeding the VAT threshold. It uniquely identifies a business for VAT purposes and must be included on all VAT invoices and returns. To obtain a VAT Registration Number, businesses need to apply through Revenue and provide necessary details about their operations.
You need to charge your customers a different rate of VAT depending on that you are selling. The standard rate of VAT is 23% but there are reduced rates for certain goods and services.
- Reduced Rate of 13.5% applies to certain goods and services and building services.
- Second Reduced Rate of 9% applies to items including newspapers, certain printed materials, and admissions to cinemas, theatres, and other cultural events. Also applies to electricity and gas.
- Super Reduced Rate of 4.8% applies specifically to the supply of livestock and greyhounds.
- Zero Rate applies to certain goods and services, such as most food items, children’s clothing and footwear, and certain medical supplies and services.
There are also certain services are exempt from VAT, such as financial, educational, and medical services.
A VAT invoice should include the following details:
- Date of issue
- Unique invoice number
- Supplier's name, address, and VAT registration number
- Customer's name and address
- Description of the goods or services supplied
- Total amount excluding VAT
- VAT rate applied and the total VAT amount
- Total amount including VAT
Date published 9 Jul 2013 | Last updated 20 Jun 2024
This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
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