VAT deduction new bike
You bought a new bike for your company and you would like to deduct the VAT of your purchase, is this possible? Yes it is! The VAT on the purchase of a business bicycle for your sole proprietorship can be deducted from your taxes. For example, if you bought a company bike for your business of €1.210 (including 21% VAT), then you are allowed to deduct €210 from your VAT report to the Dutch Belastingdienst.
But please note, you can only deduct the VAT for the part that you have used your bicycle for business purposes. Often a business bicycle is also used for private trips. Unfortunately, you cannot deduct VAT for the private use of your business bicycle. If you use your bicycle for both business and private purposes, you are dealing with mixed use of your business bicycle.
In the situation of mixed use of a company bicycle for your sole proprietorship, there are two options for deducting the VAT.
The first option is to only deduct the VAT on the part that you use your bicycle for business purposes. In this situation, you do not deduct VAT for the part that you use your bicycle privately.
Example 1: You bought a business bicycle for €1.000 excluding a 21% VAT of €210. Suppose you have used your bicycle for 50% on private trips, then you deduct 50% of €210 = €105 from your taxes on your VAT return.
The second option is to deduct the full VAT of your business bicycle for your sole proprietorship. At the end of the year you pay the VAT for the private use of your business bicycle back to the Dutch Tax Authorities.
Example 2: Just as in example 1, you have a business bicycle of €1.000 excluding 21% VAT of €210. However, this time you deduct the full amount of the VAT from your taxes. At the end of the year you will have to pay back the VAT on the part that your business bicycle was used for private purposes. If your business bicycle has been used privately for 50%, you will have to pay 50% of €210 = €105 back to the tax authorities.
Ultimately, you can deduct the same amount as taxes from your VAT return in both examples of mixed use of your business bicycle.