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Do I have to pay VAT if I sell a vehicle?

The vehicle’s purpose of use determines whether you must pay VAT when you sell the vehicle. 

  • You must pay VAT on the sale if a company has used the vehicle for VAT-deductible purposes. VAT must be paid even if the purchase price of the vehicle did not include deductible VAT. 
  • You do not need to pay VAT if the vehicle has been only in private use or has been used for another purpose that has not qualified for VAT deduction.

Example: A van has been used only for private purposes. The purchase price did not include VAT.
A construction company bought a used van from a private individual, so the purchase price did not include VAT. The company did therefore not deduct VAT on the purchase. The company uses the van only for business purposes. The van is not used privately. When the company sells the van, it has to pay VAT on the sale, because the van has been used for purposes that entitled the company to VAT deduction.

Example: A van has been used for business purposes and for private purposes
A cleaning company has had a vehicle registered as a van, and the van has been used both in the cleaning business and privately by the company’s employees. The company has deducted the portion of the VAT included in the purchase price and the operating costs that relates to business use. The portion relating to private use has not been deducted.

The company sells the van and pays VAT on the portion of the selling price that relates to the van’s business use, i.e. the portion that has entitled the company to a VAT deduction. No VAT has to be paid on the portion related to private use.

Example: A passenger car has been used as a company car
A construction company has bought a passenger car for use as a company car. The car has been assigned to the company’s managing director. If the company sells the car, no VAT needs to be paid on the sale, because the car has not been used solely for VAT-deductible purposes.

Page last updated 6/10/2020