Buying, manufacturing, importing, renting, using, transforming or repairing a tourism vehicle for your company may mean being unable to deduct the VAT incurred. The general rule is that VAT on these expenses is not deductible, but there are relevant exceptions for electric, plug-in hybrid, LPG or CNG-powered and bi-fuel vehicles, subject to maximum cost limits.

Following a new Portuguese Tax Authority’s Circular Letter (Ofício Circulado), there are aspects that companies should consider: how costs are determined, what happens when the vehicle is used for private purposes or outside the scope of the business, and how the way an operating lease (renting) contract is invoiced may determine whether VAT is deductible or not.

To access the full article, please download the PDF below. For further information, contact us at geral@ammoura.pt.