(1)

Article 168 of Directive 2006/112/EC establishes a right for taxable persons to deduct value added tax (VAT) charged on supplies to them of goods and services that are used for the purposes of their taxed transactions. Pursuant to Article 26(1)(a) of that Directive, the use of business assets for the private use of taxable persons or their staff or, more generally, for purposes other than those of their business is to be treated as a supply of services.

(2)

By Council Implementing Decision 2013/805/EU (2), Poland was authorised, until 31 December 2016, to limit to 50 % the right to deduct VAT on the purchase, intra-Community acquisition, importation, hire or leasing of certain motorised road vehicles, and on expenditure related to those vehicles, where such vehicles are not entirely used for business purposes, and to relieve taxable persons from having to treat non-business use of such vehicles as a supply of services in accordance with Article 26(1)(a) of Directive 2006/112/EC (the ‘derogating measures’).

(3)

By Council Implementing Decision (EU) 2016/1837 (3), the derogating measures were extended until 31 December 2019.

(4)

By letter registered with the Commission on 14 January 2019, Poland requested authorisation to continue to apply the derogating measures for a further period until 31 December 2022.

(5)

In accordance with the second subparagraph of Article 395(2) of Directive 2006/112/EC, by letters dated 15 April 2019, the Commission informed the other Member States of the request made by Poland. By letter dated 16 April 2019, the Commission notified Poland that it had all the information necessary to consider the request.

(6)

Poland's request was accompanied by a report on the application of Implementing Decision 2013/805/EU, including a review of the percentage limitation applied to the right to deduct VAT. Based on the information currently available, Poland considers that a rate of 50 % is still justified. It also considers that the derogation from the requirement in Article 26(1)(a) of Directive 2006/112/EC is still necessary to avoid double taxation. Those derogating measures are justified by the need to simplify the procedure for collecting VAT and to prevent tax evasion resulting from incorrect record-keeping and false tax declarations.

(7)

Extension of the derogating measures should be limited to the time needed to evaluate the effectiveness of those measures and the appropriateness of the percentage limitation. Poland should therefore be authorised to continue to apply the derogating measures until 31 December 2022.

(8)

A deadline should be set for requesting authorisation for any further extension of the derogating measures beyond 2022. Poland should also be required to submit a report accompanying any such request, including a review of the percentage limitation applied on the right to deduct VAT.

(9)

The extension of the derogating measures will have only a negligible effect on the overall amount of tax collected at the stage of final consumption and will not adversely affect the Union's own resources accruing from VAT.

(10)

Implementing Decision 2013/805/EU should therefore be amended accordingly,