Bookkeeping / VAT

Partial Recovery of VAT on Qualifying Passenger Motor Vehicles

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Revenue eBrief No. 031/21

Partial Recovery of VAT on Qualifying Passenger Motor Vehicles

The Tax and Duty Manual Partial Recovery of VAT on Qualifying Passenger Motor Vehicles has been updated to reflect the definition of a “qualifying vehicle” effective from 1 January 2021 in accordance with Finance Act 2019.

Extract:

Introduction
This guidance sets out how accountable persons can deduct up to 20% of the VAT incurred on the purchase, hiring, intra-Community acquisition or importation of certain qualifying vehicles, subject to the normal rules on deductibility.
This guidance does not cover the deductibility rules for motor vehicles used as stockin-trade, for hire in a vehicle-hire business or in a driving school business which is set out separately in the Tax and Duty Manual Recovery of VAT on Motor Vehicles.

  1. What is a qualifying passenger motor vehicle?
    A qualifying passenger motor vehicle is a vehicle that is used for at least 60% business purposes (for a period of 2 years or more) and
    * was first registered for Vehicle Registration Tax (VRT) purposes on or after 1 January 2009 up to 31 December 2020 and has CO2 emissions of less than 156g/km (i.e. CO2 emission bands A, B and C) or
    * was first registered for Vehicle Registration Tax (VRT) purposes on or after 1 January 2021 and has CO2 emissions of less than 140g/km (i.e. CO2 emission bands A and B).
    The motor vehicles covered are:
    * estate cars
    * sports motor vehicles
    * station wagons
    * motorcycles
    * motor scooters
    * mopeds
    * autocycles.
    The definition also includes single person vehicles but does not include vehicles designed and constructed for the carriage of more than 16 persons (inclusive of the driver) and vans, etc.

    Any question as to whether a particular vehicle is, or is not, a passenger motor vehicle, as defined, should be submitted for decision, together with the manufacturer’s literature and any other relevant documentation, to your Revenue Branch.

Other useful links

https://www.taxassist.ie/resources/questions-and-answers/reclaiming-vat