Council Implementing Decision (EU) 2025/539 of 18 March 2025 authorising Estonia to apply a special measure derogating from Article 26(1), point (a), and Articles 168 and 168a of Directive 2006/112/EC on the common system of value added tax
- Authority Granted: The Council of the European Union authorized Estonia to continue applying a special VAT measure, allowing a 50% deduction limit on VAT for passenger cars not wholly used for business purposes, effective from January 1, 2025, until December 31, 2027.
- Previous Measures: This decision follows Implementing Decision (EU) 2021/1998, which had similar provisions for Estonia, aimed at simplifying VAT collection and reducing administrative burdens.
- Scope of Application: The special measure applies only to passenger cars weighing up to 3,500 kilograms and with a maximum of eight seats, excluding cars for resale, taxi services, or driving lessons.
- Justification and Review: Estonia provided evidence to justify the 50% limitation based on tax audits and statistical data, and it must submit a review report for any extension beyond 2027 by March 31, 2027.
- Impact Assessment: The measure is projected to have a negligible effect on overall tax revenue and is designed to prevent tax evasion, ensuring it does not lead to fraud in other sectors or Member States.
Source eur-lex.europa.eu
