EU Extends 40% VAT Deduction Limit on Cars in Italy Until December 2028

• The EU has extended Italy’s 40% flat-rate VAT deduction limit on cars until December 31, 2028.
• This extension confirms the exception to the general EU rule of full VAT deduction for business vehicles.
• The 40% deduction applies to vehicles not used exclusively for business or professional activities; 100% deduction is allowed only for exclusive business use.
• The rule covers VAT on vehicle purchase, fuel, lubricants, and related services, but excludes vehicles used as the main business activity and certain commercial agents.
• The VAT deduction rules differ from those for direct taxes and are not based on vehicle classification under the Italian Highway Code.

Source: commercialistatelematico.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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