Global Daily Tax News, Estonia Set To Extend Company Car VAT Simplification Measure, (Feb 7, 2025)

The European Commission has proposed that Estonia should be allowed to continue to offer a simplified scheme for the taxation of passenger cars not wholly used for business purposes.

The Commission has published a proposal for a Council Implementing Decision to enable Estonia to continue to apply the measure until December 31, 2027.

Under previous Council Implementing Decision (EU) 2021/1998, Estonia was authorized, until December 31, 2024, to limit to 50 percent the right to deduct VAT on expenditure on passenger cars not wholly used for business purposes where that expenditure covers the purchase, leasing, intra-Community acquisition or importation of passenger cars not wholly used for business purposes, as well as on expenditure related to the maintenance and repair of such cars and to the purchase of fuel for them.

Further, the implementing decision provides, where a taxpayer avails themselves of the simplification measure described above, Estonia will not treat as supplies of services for consideration the use for private purposes of a passenger car included in the assets of a taxable person's business.