|Author (Corporate)||Council of the European Union|
|Series Title||Official Journal of the European Union|
|Series Details||L 165|
Council Decision of 18 June 2007 authorising Italy to apply special measures derogating from the provisions of the VAT Directive.
In October 2006 Italy sought authorisation to introduce measures derogating from the provisions of Directive 2006/112/EC (the VAT Directive) which govern a taxable person's right to deduct VAT paid on purchases and those which require tax to be accounted for on business assets used for private purposes.
The private usage of vehicles is difficult to identify accurately and even where it is possible, the mechanism for doing so is often burdensome. Under the requested measures, the amount of VAT on expenditure eligible for deduction on vehicles which are not used entirely for business purposes should, with some exceptions, be set at a flat percentage rate.
Based on currently available information, the Italian authorities believe that a rate of 40% is justifiable. At the same time, to avoid double taxation, the requirement for accounting for VAT on the private use of a vehicle should be suspended where it has been subject to this restriction. These measures can be justified by the need to simplify the procedure for charging VAT and to prevent evasion through incorrect record keeping.
|Subject Tags||Value Added Tax [VAT]|
|Countries / Regions||Italy|
|International Organisations||European Union [EU]|