THE BOTTOM LINE
A recent ruling from the Arnhem-Leeuwarden Court of Appeal provides critical guidance for businesses importing used vehicles into the Netherlands. The decision directly impacts how the Dutch vehicle registration tax (BPM) is calculated, highlighting both opportunities and potential pitfalls in valuation.
- Use the Right Historical Tax Rate: The BPM component of a vehicle’s historical new price must be calculated based on the tax rules applicable to that specific vehicle at its original registration date, not a generic reference model. This can significantly alter the depreciation base.
- Higher CO2 Can Mean Higher Value: If arguing for a higher historical BPM due to a vehicle’s specific (higher) CO2 emissions, be prepared for tax authorities to counter that its current market value is also higher. The burden of proof is on the importer to prove otherwise.
- Valuation Methods Can’t Be Mixed: Companies must choose a valuation method and stick to its rules. The court confirmed that specific damage deductions, typically available under an appraisal method, cannot be applied when using a standard price list (koerslijst) for depreciation.
THE DETAILS
The case involved a vehicle import company that had received an additional tax assessment (BPM) on four imported Audi vehicles. The dispute centered on the correct calculation of the vehicles’ depreciation, which is key to determining the final tax amount. The company successfully argued a crucial point regarding the historical new price, the benchmark against which depreciation is measured. The court affirmed that this price must include the BPM that would have been due for the actual car being registered at the time of its first use, including its specific CO2 emissions, rather than the BPM of a potentially lower-emission standard model. This victory led to a reduction in the tax assessment for two of the vehicles.
However, this ruling comes with an important caveat. The Tax Inspector successfully argued that if a higher, more specific historical BPM is used (often due to higher CO2 emissions from optional extras or a more powerful engine), it is logical to assume the vehicle’s current market value is also higher. The court placed the burden of proof squarely on the taxpayer to demonstrate that the specific features driving up the CO2 and historical BPM do not also increase its present-day market value. As the company failed to provide this evidence, the court held that the overall depreciation percentage remained unchanged, offsetting some of the gains from the historical price adjustment.
Finally, the court addressed the company’s attempt to switch its valuation strategy during the proceedings for one of the vehicles. The company sought to use a standard price list to establish the car’s value but also wanted to subtract an amount for “more than normal usage damage.” The court rejected this hybrid approach, clarifying that deductions for specific damage are a feature of the appraisal-based valuation method. A company cannot cherry-pick favourable elements from two different methodologies. This serves as a clear reminder for businesses to select their valuation strategy carefully and apply it consistently.
SOURCE
Gerechtshof Arnhem-Leeuwarden
