European Commission Proposes Extending Romania’s 50% VAT Deduction Limit for Mixed-Use Vehicles

• The European Commission has proposed allowing Romania to retain its 50% input VAT deduction limit for specified motor vehicles not used exclusively for business until 31 December 2029. [lovguiden.dk]
• The restriction applies to VAT on the purchase, intra-Community acquisition, importation, hire or leasing of covered vehicles and related expenditure, including fuel. [lovguiden.dk]
• Taxpayers subject to the 50% limit do not have to treat private use of the relevant vehicle as a taxable supply of services, avoiding separate private-use calculations.[lovguiden.dk]

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Extended article

The European Commission has proposed extending Romania’s special VAT rules for motor vehicles used for both business and private purposes.

Under the existing derogation from the VAT Directive, Romanian taxable persons may deduct 50% of the VAT incurred on specified motorised road vehicles that are not used exclusively for business purposes. The same restriction applies to related vehicle expenditure, including fuel. [lovguiden.dk]

The covered transactions include:

• purchase of a vehicle;
• intra-Community acquisition;
• importation;
• hire or leasing; and
• related expenditure, including operating costs and fuel. [lovguiden.dk]

In return for applying the standardised 50% restriction, the taxable person is not required to treat the non-business use of the vehicle as a deemed supply of services for consideration. The arrangement therefore replaces detailed allocation of business and private mileage with a simplified deduction and private-use treatment.  [lovguiden.dk]

The derogation does not apply to vehicles with a maximum permissible laden mass exceeding 3,500 kilograms or vehicles with more than nine seats, including the driver’s seat. The published proposal also refers to exclusions for specified business uses, including vehicles used for taxi services and driving schools. [lovguiden.dk]

Romania’s current authorisation expires on 31 December 2026. The Commission proposes extending the measure from 1 January 2027 through 31 December 2029. [lovguiden.dk]

The proposal explains that the restriction simplifies VAT compliance by removing the need to maintain records distinguishing business and private mileage. It is also intended to prevent incorrect deductions caused by unreliable allocation records.

The measure has not yet been finally extended. It requires approval by the Council of the European Union. Romania would need to submit a further request and supporting report by 31 March 2029 if it wished to continue the derogation beyond the proposed period. [lovguiden.dk]

External links

• Read the European Commission proposal for Romania
• Review the detailed summary of the proposed 2027–2029 extension [lovguiden.dk]
• Review Romania’s current VAT framework [taxsummaries.pwc.com]