VAT refund on fuel for passenger cars: what are the rules per country?

Tolls versus fuel: an important distinction

For transport companies travelling through Europe with passenger cars (category M1), it is important to know that the VAT rules for toll charges and fuel differ significantly.

Toll charges are fully reclaimable through the 8th Directive in virtually all EU countries, even for M1 vehicles. Fuel is a different matter. Many member states apply restrictions or exclusions to the VAT refund on fuel for passenger cars, as mixed use (business and private) is considered the norm.

It is therefore essential to know what is and is not reclaimable in each country before submitting your refund application.

Countries where VAT on fuel for M1 is not reclaimable

In the following countries, VAT on fuel for passenger cars is fully excluded from refund under the 8th Directive:

Denmark

Denmark does not allow VAT refunds on fuel costs for passenger cars. This applies even when the vehicle is used exclusively for business purposes.

Portugal

In Portugal, VAT on fuel for M1 vehicles is not reclaimable under the 8th Directive.

Greece

The Greek tax authority explicitly excludes fuel, repair, maintenance, lease and all other costs relating to passenger cars with a maximum of 9 seats from VAT refunds. This is enshrined in Greek VAT legislation and applies regardless of the business nature of the journey.

Malta

Malta fully excludes fuel and hire of means of transport from VAT refunds, including for business use. This has been confirmed by the official Maltese tax authority (MTCA).

Countries where VAT on fuel is partially reclaimable

Belgium — 35% reclaimable

In Belgium, VAT on fuel for M1 vehicles is 35% reclaimable. For N1 vehicles (vans), a higher percentage of 85% applies.

An important consideration with Belgian invoices is that they often contain a combination of costs with different refund percentages. Think of fuel for a truck (100% reclaimable), toll charges for a passenger car (100%) and fuel for a passenger car (35%). In such cases, it is strongly recommended to include a detailed calculation as an attachment to your application, making it clear to the Belgian tax authority how you arrived at the submitted VAT amount.

In addition, the product code in the application must be changed from 1.13 to 1.14 for fuel on passenger cars, so that the Belgian tax authority knows that a partial refund is involved.

Poland — 50% or 100%, depending on mileage log

In Poland, a standard VAT restriction of 50% applies to fuel costs for M1 vehicles. However, if you can provide a detailed mileage log upon request demonstrating exclusively business use, you are entitled to 100% refund. More information about the Polish rules can be found in our earlier article on N1 and M1 vehicles in Poland.

Rules change constantly

The overview above reflects the situation as currently known. However, VAT rules per EU country are subject to change. Countries can adjust their exclusions, introduce new conditions or revise existing schemes. It is therefore important to have your file assessed each quarter by a specialist who is up to date with the latest regulations per country.

The risks of incorrect filing

Incorrectly handling the VAT refund on fuel for a passenger car puts more at risk than just the few euros of VAT on that one refuel. An incorrect filing brings your entire file under scrutiny from the foreign tax authority. Incorrect filing and failing to correct this in a timely or accurate manner can lead to rejection of your entire return, including all other costs you have incurred in that country.

Let professionals guide you

Delta Refund Solutions closely monitors VAT rules per EU country and ensures that your refund application is submitted correctly in each country, with the right product codes, percentages and substantiation.

Feel free to contact us, we are happy to help.