European Union and United Kingdom: European Commission proposes to extend derogation from articles 26(1) (a),168, and 169 of EU VAT Directive for United Kingdom

October 3, 2013

The United Kingdom requested authorization to continue to apply a derogation measure concerning the right of deduction to 50% of the input VAT incurred on the hire or lease of cars used by taxable persons for both private and business purposes.

The European Commission proposes to extend the derogation until 31 December 2016 and to ask the United Kingdom to present a new report by 1 April 2016, including a review of the percentage restriction applied if a new extension request is envisaged beyond 2016.

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