Tax & Accounting Blog

Latvia – Derogation on Right to Deduct Input VAT on Passenger Cars Approved

Indirect Tax, ONESOURCE, Transaction Tax May 3, 2013

On 22 April the Council of The European Union approved Latvia’s request for a derogation in respect to the right to deduct input VAT on passenger cars not wholly used for business purposes. Under the decision Latvia will be allowed to limit the right to deduct to a flat rate of 80% and includes purchases, leases, acquisitions and importations of certain passenger cars as well as fuel for those cars. Details of which passenger cars are included in the derogation are included in Council Decision 2013-191-EU.