On Nov. 17, EC published rules on VAT derogation for passenger cars.
EC published Council Dec 2021/1997 amending decision 2018/1994 authorizing CRO to introduce a special measure derogating from point (a) of art 26(1), art 168 of VAT dir.
Context
By letter registered with EC in Mar. 2021 Croatia requested authorization to continue to apply special measure derogating from VAT dir to restrict the right of VAT deduction.
In expenditure related to some passenger cars not wholly used for business purposes.
By letter of Apr. 2021, EC notified CRO it had all information needed to assess request.
Given measure positive impact on burden of taxpayers, authorities as it simplifies VAT collection, prevents tax evasion via incorrect record keeping, it should be authorized.
The special measure will have a negligible effect on overall amount of tax revenue collected at final consumption stage, no adverse impact on EU own resources re VAT.
Decision
By way of derogation from arts 168, 168a VAT dir, Croatia authorized to limit to 50% right to deduct VAT on expenditure re cars not wholly used for business purposes.
Per new art 6 dec 2018/1994 it applies from Jan. 2019 to Dec. 31, 2024; any request for extension of the authorization must be submitted to the EC by Mar. 31, 2024.
Accompanied by a report that includes a review of percentage set in art 1 of said dec.
Effectiveness
Measure in place until Dec. 31, 2024, unless new derogation request is granted.
(Please note this content is now deemed out of scope and will not be further updated unless there is a change in process or other noteworthy event in relation to the topic).
Regulators
EU CMSN
Entity Types
CNSM; Corp
Reference
OJ, L 408/1, 11/17/2021; Dec 2021/1997, 11/15/2021; Dec 2018/1994; VAT Dir 2006/112
