Accountable persons can deduct up to 20% of VAT incurred on the purchase, hiring, intra-Community acquisition or importation of certain qualifying vehicles, subject to the normal rules on deductibility.
Qualifying passenger motor vehicle
A qualifying passenger motor vehicle is a vehicle that:
- has C02 emissions of less than 156g/km (i.e. C02 emission bands A, B and C).
Motor vehicles include estate cars, sports motor vehicles, station wagons, motor cycles, motor scooters, mopeds and autocycles.
Business use
Business use means use for either taxable activities, exempt activities or a mixture of both, but does not include private use.
Where a vehicle is
used for a taxable activity, a percentage of the VAT can be deducted.
Where a vehicle is used for an exempt activity, no deduction is allowed as per the normal VAT deductibility rules. Where the vehicle is used for both taxable and exempt activities, a percentage of VAT can be deducted.
Changing circumstances
If circumstances change i.e. a vehicle is disposed of within 2 years, or it is used for less that 60% business purposes, and VAT has been deducted, then the accountable person is required to make adjustments in the relevant taxable period.
There is no adjustment if the vehicle was hired or leased.
Vehical disposal
The accountable person must repay all or some of the VAT deducted depending on the period of time the vehicle was used, in the taxable period when the vehicle was disposed.
The following adjustment rules apply:
| Disposal within 6 months from date of purchase, acquisition or importation of the vehicle. | Adjustment of all VAT deducted. |
| Disposal in the period 6 to 12 months from date of purchase, acquisition or importation of the vehicle. | 75% adjustment of all VAT deducted. |
| Disposal in the period 12 to 18 months from date of purchase, acquisition or importation of the vehicle. | 50% adjustment of all VAT deducted. |
| Disposal in the period 18 to 24 months from date of purchase, acquisition or importation of the vehicle. | 25% adjustment of all VAT deducted. |
| Disposal after 24 months from date of purchase, acquisition or importation of the vehicle. | No adjustment. |
Business use change
Similar to the rules applying to the disposal of a vehicle, there is an adjustment of all, or part, of the amount deducted if a vehicle is no longer used for business purposes, or is used for less than 60% business purposes, at any time within 2 years of purchase, intra-Community acquisition or importation of the vehicle. There is no adjustment if the vehicle was hired or leased.
The following adjustment rules apply:
| Business use discontinues (or is used for less than 60% business use) within 6 months from date of purchase, acquisition or importation of the vehicle. | Adjustment of all VAT deducted. |
| Business use discontinues (or is used for less than 60% business use) in the period 6 to 12 months from date of purchase, acquisition or importation of the vehicle. | 75% adjustment of all VAT deducted. |
| Business use discontinues (or is used for less than 60% business use) in the period 12 to 18 months from date of purchase, acquisition or importation of the vehicle. | 50% adjustment of all VAT deducted. |
| Business use discontinues (or is used for less than 60% business use) in the period 18 to 24 months from date of purchase, acquisition or importation of the vehicle. | 25% adjustment of all VAT deducted. |
| Business use discontinues (or is used for less than 60% business use) after 24 months from date of purchase, acquisition or importation of the vehicle. | No adjustment. |
You should always seek professional advice before you undertake a SURE investment.
What happens if the you incur repairs costs on the personal car of a director that uses it partially for the trade? Can you claim any VAT or deduction for CT on such invoices?
Ana,
I presume the director is charging business mileage to the company so a claim cannot be made.
Seamus
I have just registered for VAT 2 weeks ago for my sole trader business. I just purchased a commercial van that will be used only for business use. Can I submit invoices for purchase of the vehicle and other purchases Immediately at the end of this month for reclaim of the VAT? How long does it take for VAT refund to process to bank. I am registered with ROS
Donal,
On the basis that you registered for VAT and made purchases in relation to your sole trade during the May / June 2022 VAT period, then any VAT incurred during this period on business purchases can be reclaimed in your May/June 2022 VAT return including on a commercial van. VAT on any sales made during in this period may also have to be declared to Revenue (if you account for VAT on an invoice basis). Depending on the size of the VAT reclaim it may take a few weeks to be processed by Revenue. Revenue may also request a copy of the relevant supporting purchase invoices to be submitted to them prior to releasing any refund.
Best advice:Get a good accountant!
Hope this helps.
Seamus
If a company purchases a motorhome to facilitate remote installs, where the employee goes to site and works there for a perion and then moves on to a new site, for business use. The EU classification is Category M.
I assume if a company were to be in the business of campervan Hire then they would be able to claim the VAT back ?
Assume that company is VAT registered
Eamonn,
If the motorhome is used 100% for business you should be able to reclaim VAT IMO but Revenue will scrutinise your claim.
Seamus
I bought a commercial vehicle in 2021 and received the VAT back as per normal for VAT registered business.
If I sell this vehicle on now, 3 years later, do I need to repay that VAT back to revenue?
Thanks,
Richard
Richard
VAT should be charged on the sale of the vehicle.
Seamus