Changed taxation as a consequence of recalculating the vehicle registration fee
The adoption of L4 in October 2017 means that all leased vehicles, rental vehicles, workshop vehicles and demo vehicles must have their vehicle registration fee recalculated
The adoption of L4 in October 2017 means that all leased vehicles, rental vehicles, workshop vehicles and demo vehicles must have their vehicle registration fee recalculated within four months of initial registration.
Requirements were introduced stipulating that the taxable value of the above vehicles must be recalculated upon transfer of ownership of the vehicles by means of sale or other manner to a third party, or not later than within four months of initial registration. This means that the value of a vehicle registered on 2 June must be recalculated by no later than 1 October.
This applies to all vehicles covered by a lease-agreement scheme, regardless of whether a full or proportionate vehicle registration fee is paid. The lessor is tasked with declaring the taxable value and paying the vehicle’s registration fee.
The adoption of Bill L91 B means that the rules for recalculating the taxable value of the vehicle within four months of the vehicle’s initial registration are transferred to the rules applying to the taxation of company cars.
The rules for L91 B
are set out in Section 16(4) of LL:
For vehicles purchased by the employer no more than three years after initial registration, the value of the vehicle shall be specified at the original price of the new vehicle for up to 36 months calculated from the month in which initial registration was made and then at 75% of the new-vehicle price, however such that if the taxable value of the vehicle is recalculated pursuant to Section 9a of the Vehicle Registration Fee Act, a calculated new-vehicle price based on the recalculated taxable value shall be used from the date of recalculation.
In cases where a market value prompts a legal recalculation, i.e. if the discounted taxable value at the time of recalculation is higher than the taxable value at initial registration, the discounted taxable value will be deemed the original taxable value of the vehicle going forward. The taxation rules in effect for company cars will show that a technical price of a new vehicle replaces the original price of a new vehicle and that this will then form the basis for calculating the taxation base.
For leased vehicles made available after 1 February 2020, the basis for taxation for a company car whose taxable value is recalculated pursuant to Section 9a of the Vehicle Registration Fee Act will then constitute the basis for the recalculated technical new price. This applies to any vehicle whose value has been recalculated before initially placing it at the disposal of an employee on 1 February 2020, or subsequently if the vehicle was used as a company car by another employee.
If a market price is lower than at initial registration, the basis for taxation will remain unchanged from the date of recalculation and for the remainder of the vehicle’s term of lease.
If a market price is higher than at initial registration, the basis for taxation will be higher than the original basis for taxation from the date of recalculation and for the remainder of the vehicle’s term of lease. This is due to the fact that the technical price of a new vehicle exceeds the recommended retail price.
Please note that the rules for recalculating the value of vehicles will change as of 1 January 2022. For all new vehicles registered as of 1 January 2022, the recalculation must be done within three months of initial registration or if ownership of the vehicle changes by means of sale or other transfer to a third party. This is to be done on the basis of the political agreement on tightening the rules for recalculation as part of the adoption of the Compromise Agreement on the Police from December 2020.
See also previous information relating to new vehicle taxes: