2007/441/EC: Council Decision of 18 June 2007 authorising the Italian Republic to apply measures derogating from Articles 26(1)(a) and 168 of Directive 2006/112/EC on the common system of value added tax

By way of derogation from Article 168 of Directive 2006/112/EC, Italy is hereby authorised to limit to 40 % the right to deduct the VAT charged on expenditure on motorised road vehicles not wholly used for business purposes.

By way of derogation from Article 26(1)(a) of Directive 2006/112/EC, Italy is also required not to treat as supplies of services for consideration the use for private purposes of vehicles included in the assets of a taxable person's business, where that vehicle has been subject to a restriction of the right to deduct under this Decision.

Expenditure relating to vehicles is excluded from the restriction on the right to deduct as authorised by this Decision where the vehicle falls into any of the following categories: the vehicle forms part of the taxable person's stock-in-trade in the exercise of his activity, the vehicle is used as a taxi, the vehicle is used for instruction by a driving school, the vehicle is used for hire or leasing, the vehicle is used by sales representatives.

The related expenditure shall cover the purchase of a vehicle, including contracts of assembly and the like, manufacture, intra-Community acquisition, importation, leasing or hire, modification, repair or maintenance, and expenditure on supplies or services performed in relation to vehicles and their use, including lubricants and fuel.

Articles 1 and 2 shall apply to all motorised vehicles, other than agricultural or forestry tractors, which are normally used for carrying persons or goods by road with a maximum authorised mass not exceeding 3500 kilograms and having not more than eight seats in addition to the driver's seat.

An assessment covering the first two years of the application of this Decision, including a review of the percentage restriction applied, shall be submitted to the Commission after the second anniversary of this Decision, and in any case by 31 December 2009.

This Decision shall expire on the date of entry into force of the Community rules determining the expenditure relating to motorised road vehicles that is not eligible for a full deduction of value added tax, but on 31 December 2010 at the latest.

This Decision is addressed to the Italian Republic.