When a business is considering purchasing a vehicle the ultimate cost of the vehicle will be determined by a business’s ability to recover the VAT.
Most businesses are aware that VAT can be reclaimed in respect of the purchase of a commercial vehicle but may not be aware that an element of VAT can be reclaimed in respect of passenger motor vehicles.
To reclaim VAT on a passenger motor vehicle the following conditions must be met;
Where all of the above conditions are met 20% of the VAT on the purchase price can be reclaimed.
However, if the business use falls beneath the 60% in the first two years a portion of the VAT reclaimed will need to be repaid to Revenue.
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