Tax & Accounting Blog

Latvia – Proposed Derogation on The Right to Deduct Input Tax on Passenger Cars

Indirect Tax, ONESOURCE, Transaction Tax February 21, 2013

Latvia has requested authorization to derogate from the provisions of Directive 2006/112/EC governing the right to deduct input tax paid on passenger cars. Under the proposal Latvia would be authorized to limit the right to deduct the value added tax (VAT) on expenditures on passenger cars not wholly used for business purposes to 80%. The limitation of the right of deduction would apply to VAT paid on the purchase, leasing, intra-Community acquisition and importation of qualifying passenger cars and on expenditures related to those cars, including the purchase of fuel.

COM(2013) 68 final: