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VAT

40% deduction of VAT for vehicles has been confirmed

Simonetta La Grutta Simonetta La Grutta

With the implementing decision (EU) no. 1982 dated 8 November 2016, the Council of the European Union accorded Italy an extension to continue applying – up to 31 December 2019 – a special derogation from the provision of Directive 2006/112/CE, concerning the limitations to deduction of VAT borne on the purchase of some kinds of means of transport and on the related expenses.

Such provisions introduce restrictions to the right to deduct VAT borne on the purchase of road motor vehicles usually used for the transport of people or goods and having a maximum weight of 3.500 kg and maximum eight seats, excluded that of the driver.

The regulation also limits the right to deduct VAT borne on the expenses related to the abovementioned vehicles, including both goods and services.

Both for the purchase of the vehicles and their related expenses, VAT can be deducted only partially, for a percentage equal to 40%.

The abovementioned extension of such limits is aimed at significantly reducing the administrative burden and to prevent tax evasion.

 

Thanks to Eutekne for the kind concession of the article.