Dynamics 365 Business Central – How to post Purchase Invoices for Lease Cars using the non-deductible VAT feature

Dynamics 365 Business Central

Leasing a car through a business allows for reclaiming only 50% of input VAT on the lease cost unless it is exclusively used for business purposes.
Despite posting the purchase invoice at the full amount, including VAT, only a portion of the VAT can be reclaimed, requiring a method to expense the unreclaimable amount.
The "Non-Deductible VAT" feature in Business Central can be configured to accommodate this scenario.
Steps include switching on the "Non-Deductible" feature in the VAT Setup page and creating a new "VAT Product Posting Group" for lease car invoices.
The new VAT Product Posting Group is assigned to the Lease Vehicles GL code, and added to the VAT Posting Setup with options for non-deductible VAT percentages and GL codes.
When posting a Purchase Invoice for a lease car, only 50% of the VAT can be reclaimed, with the non-deductible portion specified in the entry and GL accounts.
The new VAT combination is included in the VAT Statement for calculations and submission.
The "Non-Deductible" features in Business Central streamline the process of handling lease car Purchase Invoices, eliminating the need for manual journal management.

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