Businesses who makes supplies that are charged to VAT are entitled to claim input VAT on their business expenses. However, section 60 of the VAT Consolidation Act 2010 prohibits VAT deductibility by businesses for anti-avoidance reasons on certain goods and services which, by their ubiquitous nature, are not easily distinguishable from general non-business use. Expenditure on motor vehicles, as well expenditure on petrol, food and drink, accommodation and entertainment is specifically excluded from deductibility entitlement, even where the goods and services are acquired or used for the purpose of a taxable business. As the anti-avoidance concerns regarding motor vehicle expenditure deductibility continue, the restriction on VAT deductibility remains valid.
The Deputy will be aware that I have extended the VRT relief for hybrid and electric vehicles in the Finance Bill. This provides that electric vehicles can avail of up to €5,000 in relief from VRT; plug-in hybrid electric vehicles can avail of relief of up to €2,500 and hybrid electric vehicles can avail of relief of up to €1,500.