Tax Flash No. 10/2012

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EU Council Decision no. 232 of 26 April 2012 was published in EU Official Journal on 01.05.2012.

Based on EU Council Decision 2012/232/EU, Romania is authorised to limit to 50 % the right to deduct the VAT on the purchase, intra-community acquisition, importation, including hire or leasing of motorised road vehicles as well as the VAT charged on expenditure related to those vehicles, where the vehicle is not used exclusively for business purposes.

Also, based on EU Council Decision 2012/232/EU, Romania is authorised not to treat as a supply of services for consideration the private use by a taxable person or his staff or, more generally, for purposes other than those of his business, of a vehicle to which the restriction referred above is applicable.

The restrictions shall not apply for the vehicles exclusively used for the activities listed in the Decision (currently included under art. 145^1 of the Fiscal Code).

The novelty of these provisions is represented by the fact that the limitation shall observe, beside the excepted categories, the manner in which the vehicles are being used for business and private purposes. Also, the limitations are extended to any type of cost incurred for using the vehicles as well as, for vehicles procured under leasing or hire arrangements.

The provisions of this decision shall be implemented in the Fiscal Code and shall be applicable as of the date when the ordinance amending the Fiscal Code enters into force. Also, a transitory regime shall be provided for the vehicles procured under leasing and hire arrangements which are on going at the moment of entering into force of these amendaments.

Decision 2012/232/UE shall apply until the date of entry into force of a Union rules determining the expenditure related to motorised road vehicles that is not eligible for full deduction of VAT, or on 31 December 2014, whichever date is earlier.

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