In order to correctly declare VAT input, is important to clarify which kind of costs are related to the automobile and which are not. There is no doubt that the purchase of fuel and spare parts, car maintenance, repairs and parking fees are the car related expenses.
Somewhat disputed, however, may be the situation in relation to a stationary parking space.
Even if the company pays to the lessor in addition to the offices a rent for parking space, it is not always possible to say that this kind of expenditure is solely and exclusively related to the company’s own vehicle because this parking space may be also used by customers. In this case, the cost is still more of a general administrative expenses.
However, in case the parking space can only be associated with a particular car, the tax authorities would like to attribute that expense to company’s car and allow only 50% of the input VAT be deducted.
Another contentious issue is car trailers rent or purchase. The Ministry of Finance and the Tax and Customs Board are on the view that the purchase and lease of the trailer is not car related expenditure. A commercial placed into a car nor is a car related expenditure.
Another issue is raised in connection with the parking and ferry tickets, as they are part of the documented costs of the travelling expenses. Here, too, the tax authorities have expressed the view that, the parking and ferry tickets as well, are still attributable to a particular vehicle and it should be examined does the taxpayer have the right of 100% or 50% deduction of input VAT in this certain taxation period. According to this period, a particular invoice must be declared. It should be taken into consideration that the right to deduction of VAT is only when an invoice has been issued on the name of the company and it corresponds to VAT Act § 37 requirements.
The restriction regarding to input VAT deduction extends only onto the company owned automobile or car in use. The situation is different if an employee uses a personal car during business trip. In that case a ferry ticket or a parking ticket issued on the name of company is eligible for full deduction of input VAT (at least so far there is no evidence of an adverse administrative practice). If invoice is not issued on the name of the company or does not correspond to VAT Act § 37 requirements it is not permitted to deduct input VAT.