European Commission Adopts Proposal for Council Decision on Italian VAT Deduction Limit for Vehicle Expenses

The European Commission (EC) Oct. 24 proposed Council Implementing Decision No. COM (2025) 641, amending Decision 2007/441/EC to extend Italy’s authorization to derogate from Council Directive 2006/112/EC on the common system of VAT by restricting the input VAT deduction for motorized road vehicles partially used for non-business purposes. The derogation permits Italy to limit the VAT deduction to 40 percent of expenses related to purchases, leases, intra-Community acquisitions, imports, repairs, maintenance, and fuel for such vehicles. The proposed decision includes measures to: 1) extend Italy’s authorization to Dec. 31, 2028, from Dec. 31, 2025; and 2) require Italy to submit ...