"NEWS October 3, 2016-VAT treatment in the supply of cars"
When a company, an entrepreneur or a professional is preparing to surrender a vehicle, you must locate the correct discipline to apply for VAT purposes.
A premise must be recalling that article 19-bis 1, paragraph 1, lett. c), DPR 633/1972, establishes, as a general rule, that the tax on the purchase or importation of motor vehicles is permitted in deduction to the extent of 40% if the vehicles are not used exclusively for business, art or profession. The provision does not apply, however, when these vehicles are the subject of activity of the enterprise and for agents and sales representatives.
It is important to point out that for motor vehicles means all motor vehicles, other than agricultural or forestry tractors, normally used for the road transport of people or goods, the maximum authorised mass of which does not exceed 3,500 kg and whose number of seating positions, excluding the driver, is not more than eight.
In the light of the reduced deduction that can be applied at the time of purchase, the subsequent resale of the submission must be handled in a "symmetrical", by reducing the taxable amount for Vat in relation to the tax actually deducted at the time of purchase.
Therefore in order to establish the correct VAT treatment of the supply of a business vehicle, goes first checks that tax deduction made at the time of purchase.
The situations that may arise are therefore as follows.
- Fully VAT deducted upon purchase
In this case, that may present with reference to vehicles used exclusively for carrying on their activities or in the case of commercial agents and representatives, the entire agreed remuneration for its supply of the vehicle subject to VAT with standard rate.
- Tax not deducted in full at the time of purchase
For example, to purchase flight operated by doctors or insurance agents (undeductable subjective) presenting a pro-rata undeductable equal to 100%.
For VAT purposes of the sale of the vehicle must be qualified as exempt transaction pursuant to article 10, paragraph 27-d, DPR 633/1972, and this designation must be indicated in the invoice.
- VAT partially deducted upon purchase
On the basis of article 13, paragraph 5, of presidential decree 633/1972 "for supplies that are used to purchase or import goods for which the deduction was reduced in accordance with article 19-bis. 1 or any other provision of objective undeductable, the taxable amount shall be determined by multiplying the percentage deductible pursuant to those provisions, the amount determined under the preceding subparagraphs".
In view of the fact that from 2001 to date have followed different percentages of undeductable VAT on purchases of cars, will be verified what percentage of undeductable was applied when posting the purchase invoice (or possibly as such deduction has been adjusted following the presentation of the petition for reimbursement, D.L. 258/2006).
The amount of the sale will follow the following treatment:
- will be subject to VAT insofar as ordinary taxable amount determined by multiplying the consideration for the percentage of deduction, deducting the VAT;
- the remainder will be "article 13, paragraph 5 overs ex Vat, DPR 633/1972".
As an example of determination of the taxable amount of the supply, we hypothesize that a motor vehicle for which Vat was deducted at the time of purchase to the extent of 40%, is sold to the selling price of 12. 000 euros.
|The taxable amount for VAT will be determined in the following way:||
and invoice shall be as follows:
In the case of purchases made at an individual or individuals who apply the margin scheme under article 36 D.L. 41/1995, upon resale the margin scheme should be applied: the invoice must not be exposed VAT, but must be stated that it is "transaction subject to the margin scheme provided for in article 36 of Decree # 41/95 as amended ".
by Bruce Ferreira