Greece publishes Ruling on Adjusting Input VAT Deductions Relating to Unused Capital Goods

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With respect to the decision from Supreme Administrative Court, Greece ’s Independent Authority of Public Revenue (IAPR) published the rulings related to VAT incurred on capital goods that are not used within five years of its purchase or construction.

As per the rulings, if the capital goods are not utilized within five years from its purchase or construction, they will be considered out of the scope of VAT, that is, the deductions will no longer be allowed in Greece. Therefore, the taxpayer will have to make a one-off adjustment of the input VAT originally deducted in the return for the fiscal years ended from 19 August 2015.

But the deduction of input VAT, as per the decision of Supreme Administrative Court, is permitted for the capital goods if the non-utilization is due to the situations that are out of the control of the business. This can be a circumstance when the non-use is due to unlawful actions or omissions of the State. As a result, the taxpayer will not have to make adjustments to the input VAT amount deducted.

The case can be any incompletion of incentive laws relating to investment plans, wherein an extension is granted. So, in such cases, in order for the business to avail the deduction, the necessary documents regarding the extension will have to be submitted. If the business has already adjusted the input VAT incurred for the investment plans that have already been granted with the extension, the taxpayer can seek recovery of the particular VAT amount.