Estonia: VAT deduction restriction extension proposed
On February 4, the European Commission (EC) adopted Proposed Council Implementing Decision No. COM (2025) 29 in response to Estonia’s request for an extension of a special VAT measure. The measure restricts input VAT deduction rights for passenger cars not used entirely for business purposes.
- The derogation allows Estonia to limit the VAT deduction to 50% on the purchase, lease, intra-Community acquisition, or import of passenger cars, as well as on related repair and fuel costs.
- The proposed decision includes the following provisions:
- Extending Estonia’s authorization for the VAT deduction restriction until December 31, 2027 (previously set to expire on December 31, 2024).
- Requiring Estonia to submit any request for a further extension to the EC by March 31, 2027.
The decision is subject to approval before the extension takes effect.
Source: europa.eu
