The situation
A turnover breakdown by supply type and a list of large purchases, uploaded
Your group’s leasing company in Warsaw finances cars and machinery, arranges insurance alongside the leases and lets part of its office building. Its branch in Prague does the same on a smaller scale. Input VAT on a new IT platform and an office fit-out runs to seven figures, and the auditors have asked how the recovery percentages were set.
The rules fit on a page. The hours go on the inputs: which costs relate directly to taxable or exempt supplies, which are general overheads, which receipts stay out of the fraction and how the provisional rate is corrected at year end. Two countries apply the same directive in their own way.
What the research has to settle
The rules behind the answer
- Direct attribution comes first
- Input VAT on costs used only for taxable supplies is deductible in full, and on costs used only for exempt supplies not at all. The pro-rata applies to what remains: costs used for both.
- The standard fraction
- Under the VAT Directive, the deductible proportion is taxable turnover over total turnover, rounded up to a whole percentage. Incidental financial and real-estate transactions and disposals of capital goods used in the business are left out. A provisional rate based on the previous year is corrected once the year’s figures are known.
- Other methods are possible
- Member states may allow or require a sector-based method or a split based on actual use. In Banco Mais (C-183/13) the Court of Justice accepted that a leasing company could be required to use only the interest element of its lease instalments in the fraction, where that better reflects use.
- Activities outside VAT are a separate step
- Costs that also serve activities outside the scope of VAT are split before the pro-rata, by a method national law sets. Poland, for example, has a separate pre-coefficient for this. In Securenta (C-437/06) the Court left the choice of method to member states, within limits.
How it runs in azta
From the question to the document
The question, as you would type it
Attached: 2025 turnover of our Warsaw leasing company and its Prague branch, split into finance leases, operating leases, insurance and rent. How do we set the input VAT pro-rata in each country, which receipts are excluded, and can we use only the interest element of finance leases?
You start with
A turnover breakdown by supply type and a list of large purchases, uploaded
- 01
Upload the turnover breakdown
Add last year’s turnover by supply type and the list of large purchases. azta reads them and refers back to the lines it relied on.
File upload· Pro - 02
Research the deduction rules
Ask about attribution, the fraction and the corrections in each country. azta cites the VAT Directive, the Polish and Czech VAT acts and the case law on leasing companies.
Cited research· Free - 03
Draft the memo
Ask for a memo per entity covering method, receipts excluded, the provisional and final rate and the open points. Edit it in Canvas.
Canvas · Ask azta· Pro - 04
Export for the auditors
Export to Word and keep the cited research with the working papers.
Word export· Pro You send
A memo on input VAT attribution and the pro-rata, per entity
What you get
A memo on input VAT attribution and the pro-rata, per entity
Tax memo · draft
Input VAT recovery: Warsaw company and Prague branch, 2026
Direct attribution. Input VAT on the leased cars and machinery is attributed to the taxable leases and deducted in full. Input VAT on the costs of arranging insurance is attributed to exempt supplies and not deducted. The remaining overheads, including the IT platform, fall under the pro-rata.
The fraction. For Poland, the provisional rate for 2026 follows the 2025 turnover in Annex 2, with incidental financial income and the sale of two office floors left out. Whether the interest-only approach is available or required for the finance leases is set out in section 4, with the national rules and the case law.
Prague branch. The branch applies the Czech rules to its own supplies. Its fraction and the annual correction are worked out separately in section 5. The capital goods adjustment for the office fit-out is tracked in the fixed-asset register.
Outcomes on your numbers
What azta is worth on this task
Pro pays for itself after
13 minutes a month
At €125 an hour, that is all the time Pro (€27 a month) has to take off your desk to cover its price.
Example figures. Replace them with your own.
- Hours back a year
- 25
- Capacity at your rate
- €3,150
- More pro-rata memos a quarter
- 0.7
- Return on Pro
- 9.7×
- Research
- Drafting
- Your review
A scenario you set, not a promise. The hours that come back go to another client, or deeper into this one.
Want these numbers on your team’s real workload?
Book a demoWhat stays with you
- The turnover figures and the attribution of each cost.
- The method you adopt and any agreement with the tax authority.
- The calculation itself, which azta does not perform.
Frequently asked questions
- Does azta calculate the recovery percentage?
- No. It sets out the rules, the exclusions and the case law, and drafts the memo. The calculation runs on your figures in your own model.
- Can it compare the Polish and Czech rules?
- Yes. Ask for a comparison table. Each row cites the national provision in the original language.
- Who sees the uploaded turnover data?
- Your documents are never used for training on any plan and stay in the EU/EEA. On Enterprise, a sealed tenant and SSO are available.
