European Union Gazettes EC Decision on Estonian VAT Deduction Limit for Specified Vehicle Expenses

The European Union Official Gazette March 21 published the European Council (EC) Decision No. 2025/539, extending Estonia’s authorization to derogate from Directive 2006/112/EC on the common system of VAT by restricting the input VAT deduction for passenger cars partially used for non-business purposes. The derogation permits Estonia to limit the VAT deduction to 50 percent of expenses related to purchases, leases, intra-Community acquisitions, and imports of such cars and related repair and fuel costs. The decision includes measures: 1) extending Estonia’s authorization to Dec. 31, 2027, from Dec. 31, 2024, with the decision applying from Jan. 1, 2025; and 2) ...