|Author (Corporate)||Council of the European Union|
|Series Title||Official Journal of the European Union|
|Series Details||L 311|
On 20 September 2018 the European Commission presented a proposal for a Council Implementing Decision authorising the United Kingdom to continue to apply a special measure derogating from Articles 16 and 168 of the VAT Directive. The Council of the European Union adopted the Decision on 4 December.
Article 168 of the VAT Directive provides that a taxable person is entitled to deduct VAT charged on purchases made for the purpose of taxed transactions. Article 16 of the same Directive requires the application by a taxable person of goods forming part of his business assets for his private use or for that of his staff to be treated as a supply of goods for consideration, where the VAT on those goods or the component parts thereof was wholly or partly deductible. This system allows for the recovery of initially deducted VAT in relation to the private use.
In the case of company cars, partly used for private (non-business) purposes, it is often a difficult matter to calculate and to tax expenditure related to the private use under the above-mentioned rules. In this context, in 1986 the United Kingdom was authorised by the Council to introduce a special scheme applying flat-rate measures in respect of non-deductible value added tax charged on fuel expenditure in company cars. This derogation, which has been renewed twice, is due to expire on 31 December 2018.
In April 2018, the United Kingdom requested authorisation to continue to apply the measure. The proposed Decision extends the derogation until 31 December 2020.
|Subject Tags||Value Added Tax [VAT]|
|Countries / Regions||United Kingdom|
|International Organisations||European Union [EU]|