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Lithuania: Value Added Tax (VAT)

Alessandro PasutWhen the rental services of real estate (or a vehicle) and other services related with the exploitation of that asset constitutes a single economic supply, such services are treated as one transaction for VAT purposes. If the real estate lease agreement contains a clause that the agreement will be terminated if the lessee does not pay for at least one service which is related to the exploitation of the real estate, i.e. insurance, utilities and other services, such a clause can be the determining condition for treating such services (rental and insurance, utilities) as a single supply. If a vehicle insurance constitutes separate and independent purpose for a lessee and (or) there is a possibility for the lessee to choose whether to conclude an insurance agreement independently, such criterion can be decisive to treat vehicle rental services and vehicle insurance services as separate services.

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Romania: value added tax

Clarifications about value added tax have been introduced in relation to expenditure for vehicles that are owned or used by a taxable person, which are not exclusively used to carry out the taxable person’s economic activity and for which the right to deduct the related VAT is limited to 50%. This category comprises only the expenditure directly assigned to a vehicle, such as repairs, maintenance, lubricants, spare parts or fuel used for the functioning of the vehicle.

In addition, the VAT incurred with respect to vehicles used exclusively for the purpose of performing an economic activity may be entirely deducted as long as the taxable person holds the documents required by law and keeps accurate car logs. Taxable persons that apply the 50% limitation on the right to deduct VAT are not required to keep car logs.

Additional clarifications have been introduced in relation to specific cases where vehicles used for the transportation of employees to and from their work place are considered to be used to perform an economic activity.