Work Van Leasing & VAT
For an electrician, plumber or handyman, a van is often one of the biggest regular business costs. But the monthly price on a leasing quote is not always the whole story. Does it include VAT? Can you claim that VAT back? What happens if you also use the van outside work?
Revenue published updated vehicle-leasing guidance on 16 October 2026, covering extras supplied with a hired vehicle. This is a clarification, not a new VAT rate or an automatic entitlement to a refund.
Here is what Irish tradespeople should check before signing a lease or preparing their next VAT return. This guide focuses on ordinary van hire and leasing where Irish VAT applies.
Can you reclaim VAT on a leased van?
Generally, a VAT-registered business can reclaim VAT on the hire or lease of a qualifying commercial van used for its taxable business activities. The reclaim is made through the business's VAT return.
The main checks are:
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You are registered for VAT.
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The vehicle qualifies for VAT recovery; calling it a “work vehicle” is not enough.
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The cost relates to your taxable business activity, rather than private use or VAT-exempt work.
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You have a valid VAT invoice supporting the claim.
Being a sole trader does not, by itself, prevent you from claiming. Equally, owning a limited company does not automatically make every vehicle cost eligible. If you are not VAT-registered, you cannot simply deduct the VAT from the leasing bill or reclaim it through an ordinary VAT return.
Check the vehicle, not just the advert
A van designed to carry tools and materials is not treated in the same way as an ordinary passenger car. Passenger vehicles have separate VAT restrictions, even when used for work.
Some crew-cabs, SUVs and converted vehicles need a closer look. Ask the supplier for the vehicle's registration and classification details before assuming that all the VAT is recoverable.
Revenue's guidance on recovering VAT on motor vehicles explains these distinctions. Checking the actual vehicle and its use is safer than relying on the word “commercial” in a sales listing.
What VAT should appear on the rental?
The hire of an ordinary goods van where Irish VAT applies is generally subject to the standard rate of 23%.
For example, a monthly rental quoted at €500 plus VAT means:
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Rental before VAT: €500.
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VAT at 23%: €115.
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Total invoice to pay: €615.
If the van qualifies and is used entirely for your taxable business activity, the €115 may be recoverable through your VAT return. You still pay the supplier €615; the reclaim is not a discount at the point of payment.
If you are comparing quotes, check whether each price includes VAT and whether insurance, maintenance and other charges are included.
What if you also use the van privately?
You cannot reclaim VAT relating to private use. Where a qualifying van has both business and private use, the claim must reflect the eligible business proportion.
Using the same example, suppose 80% of the use is for taxable business work and 20% is private. Assuming no other restriction applies, the VAT claim would be €115 × 80% = €92, not the full €115. The remaining €23 of VAT would not be reclaimable.
Keep a mileage log or other reliable evidence to support the split. Do not choose a percentage simply because it produces a convenient figure. Revenue's general VAT-recovery rules exclude VAT relating to non-business use and exempt activities.
Insurance, maintenance and extras: what has Revenue clarified?
The latest guidance explains how charges supplied with vehicle hire should be treated. A separate line on the bill does not automatically mean a separate VAT treatment.
Maintenance included in the lease: Where the contract combines vehicle hire and regular maintenance, the combined charge follows the VAT rate applicable to the hire.
Accessories supplied with the vehicle: These follow the hire's VAT rate even if the supplier charges for them separately.
Insurance: Genuine insurance supplied as a distinct, independent service can be VAT-exempt. However, amounts included in the taxable hire charge do not become exempt simply because they are labelled “insurance”. Check the arrangement rather than assuming every insurance-related charge has the same treatment.
Separately invoiced repairs to damage can have different VAT treatment from the rental itself. If the invoice is unclear, ask the supplier to explain it before making a claim. Revenue sets out the detail in section 7 of its vehicle-hire manual.
Can you claim VAT on running costs too?
VAT on diesel, repairs and servicing may also be recoverable to the extent that the costs relate to eligible taxable business use. Keep the invoices and apply the appropriate business-use restriction.
Petrol is different: VAT on petrol is generally not recoverable, even when it is used for business driving. The exception for petrol bought as stock for resale is not the ordinary tradesperson's situation.
VAT recovery is also separate from claiming an expense against business profits. Do not treat the VAT reclaim as an income-tax saving or count recoverable VAT twice in your accounts.
Keep the agreement and invoices
Save the signed agreement, VAT invoices, details of additional charges and evidence of business use. Keep records supporting your VAT claim for at least six years, and longer if a related claim, appeal or Revenue enquiry remains unresolved.
Finally, check what you are actually signing. Hire purchase is not the same as ordinary rental: for VAT purposes, the vehicle supply generally takes place when it is handed over, rather than being treated as a fresh rental each month. The agreement and invoice determine the correct approach.
Get the figures checked before you commit
Bond & Co. helps tradespeople and small businesses in Swords, Dublin, understand VAT and keep their records in order. Whether you are replacing an older van or leasing your first one, checking the quote and tax treatment early can prevent avoidable mistakes.
Contact Bond & Co. for advice on your van lease, VAT claim and business accounts.