Considerations on COM(2025)104 - Authorisation of Slovakia to derogate from point (a) of Article 26(1) and Articles 168 and 168a of the VAT Directive

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dossier COM(2025)104 - Authorisation of Slovakia to derogate from point (a) of Article 26(1) and Articles 168 and 168a of the VAT Directive.
document COM(2025)104 EN
date April 14, 2025
 
table>(1)Articles 168 and 168a of Directive 2006/112/EC govern the right of taxable persons to deduct value added tax (VAT) charged on supplies of goods and services used by them for the purposes of their taxed transactions. Article 26(1), point (a), of that Directive contains a requirement to account for VAT when a business asset is used for private purposes of taxable persons or their staff or, more generally, for purposes other than those of their business.
(2)By letter registered with the Commission on 5 November 2024, Slovakia requested from the Commission an authorisation, in accordance with Article 395(2), first subparagraph, of Directive 2006/112/EC, to introduce a special measure derogating from Article 26(1), point (a), and Articles 168 and 168a of that Directive to limit to 50 % the right to deduct VAT on expenditure on certain vehicles not wholly used for business purposes, and not to treat as a supply of services for consideration the use for non-business purposes of such a vehicle included in the assets of a taxable person’s business where that vehicle has been subject to such a limitation (the ‘special measure’).

(3)The requested special measure covers vehicles, not wholly used for business purposes, namely motor vehicles in the category M1, as specified in Regulation (EU) 2018/858 of the European Parliament and of the Council (2), and motorcycles in the categories L1e and L3e, as specified in Regulation (EU) No 168/2013 of the European Parliament and of the Council (3). The transactions covered are the purchase, intracommunity acquisition and importation of such vehicles, as well as the leasing thereof. The limitation of the right to deduct VAT includes expenditure on spare parts, accessories, services and fuelling intended for such vehicles.

(4)Certain vehicles should be excluded from the scope of the special measure since, due to the type of business for which they are used, any non-business use thereof is considered to be negligible. Therefore, the special measure should not apply to motor vehicles or motorcycles purchased for resale, hire or lease or used for the transportation of passengers for consideration, including taxi services, the provision of driving lessons, testing purposes or as replacement of vehicles undergoing works.

(5)In accordance with Article 395(2), second subparagraph, of Directive 2006/112/EC, the Commission transmitted the request made by Slovakia to the other Member States by letter dated 29 November 2024. By letter dated 2 December 2024, the Commission notified Slovakia that it had all the information necessary to consider the request.

(6)Slovakia included in the request an explanation of the reasons for setting the percentage for the limitation of the right to deduct VAT at 50 %. Slovakia used for that purpose data obtained from control activities and audits, together with a survey conducted with businesses. According to Slovakia, the results of the analysis of those data led to the setting of the percentage at 50 % as an accurate reflection of the distribution between private and business purposes of the use of the vehicles for which the special measure is intended.

(7)Slovakia submits that the special measure will have a positive impact with regard to the administrative burden of taxpayers and of tax authorities by simplifying VAT collection and preventing tax evasion through incorrect record-keeping. For those reasons, the Commission considers it to be appropriate to authorise Slovakia to apply the special measure until 30 June 2028.

(8)The special measure should be limited to the time needed to evaluate the effectiveness and the appropriateness of the percentage limitation applied.

(9)The special measure is proportionate to the objectives pursued, namely to simplify the procedure for collecting VAT and to prevent certain forms of tax evasion or avoidance, since it is limited in time and scope. In addition, the special measure does not give rise to the risk that fraud would shift to other sectors or to other Member States.

(10)In the event that Slovakia considers an extension of the special measure beyond 30 June 2028 to be necessary, it should submit to the Commission a request for such an extension by 30 September 2027. That request should be accompanied by a report on the application of the special measure, including a review of the percentage limitation applied.

(11)According to information provided by Slovakia, the special measure will have only a negligible effect on the overall amount of tax revenue Slovakia collects at the stage of final consumption, and it will have no adverse impact on the Union’s own resources accruing from VAT,