On 27 October 2025, the European Commission published a proposal authorising Italy to extend until 31 December 2028 the measure limiting to 40% the right to deduct VAT on the purchase and related expenses for certain motor road vehicles when they are not used exclusively for business purposes.

This limitation also applies to operations such as assembly, leasing, repair, maintenance, and associated expenses (fuels, lubricants, etc.).

In return, Italy may continue to refrain from taxing the private use of these vehicles, provided that VAT deduction is already limited to 40%.

Rome justifies this extension due to the difficulty in distinguishing between business and private use of vehicles, both for companies and for the tax authorities. The Commission considers the measure proportionate and effective in combating fraud and abuse.

If Italy wishes to maintain this measure beyond 2028, it will need to submit a new request before 31 March 2028.

Would you like to know more?
ASD Group supports companies with their VAT obligations. Our experts can assist you in understanding the impact of these measures on your activities in Italy and across the European Union.

Please feel free to contact our experts to be prepared for future developments.

Source: European Commission (PDF in English)