Romanian Govt To Ask EU OK For VAT Deduction Ban

“The Government intends to remove the right to VAT deduction on the purchase of vehicles and fuel and lubricant spending, but this requires consultations with the European VAT Committee, according to European directives," official sources told MEDIAFAX Sunday.

 

"As for the proposition to limit to 30% the right to VAT deduction connected to spending generated by vehicle maintenance and repair, this measure does not comply with European directives and thus requires derogation from the EU Council. Requests for derogation and consultations with the VAT Committee have been written and sent to the European Commission," the sources added.

 

Companies will no longer be able to deduct VAT for the acquisition of motor vehicles of up to 3.5 tons and up to nine seats including the driver’s seat, and the provision also applies to clients of leasing companies, ministry sources told MEDIAFAX Friday.

 

Also, VAT will no longer be deductible for goods used for motor vehicles, such as fuel, lubricants, car parts, repairs and maintenance, the sources said citing a emergency decree.

 

Vehicles used for commercial purposes, in view of sale, and those for passenger transportation, including taxis, are exempt from this provision.

 

Leasing companies will continue to deduct VAT upon acquiring vehicles from a supplier, but their clients will not be able to deduct the value added tax in the case of financial leasing.

 

In the case of operating leasing, which doesn’t entail the acquisition of the vehicle by the client at the end of the contract, VAT deduction is limited at 30% both for leasing installments and all other expenses related to repair or maintenance.