One of the ways in which the state can collect tax debts is to harmonise regulations, which are to be more readable with each amendment. Changes in fiscal policy also mean a reduced probability of tax avoidance at the level assumed by officials. While tax law on private individuals can be regarded as readable, this is not the case for entrepreneurs. Frequent changes are related, for example, to the way official cars are accounted for.
The tax law in force since 1 January 2019 determines, among other things, the value limit of a passenger car, to which the entrepreneur may apply full deduction of the depreciation charge. Interestingly, in the case of electric cars, the amount was increased to PLN 225,000 (from PLN 150,000 for conventional cars). The increase can be explained both by the increase in the price of new vehicles and also by the increased traffic in car dealerships and thus by increased budget revenues from other taxes.
Similar amounts for passenger cars are valid for leasing or contracts of a similar nature. Also at PLN 150,000 for combustion vehicles and PLN 225,000 for electric cars, the legislator has set the maximum amount adopted for the purpose of insurance calculation, the amount of which may be recognised as deductible costs in the company.
Private car in the company
If the entrepreneur wants to use the car for both private and business purposes, he will be obliged to choose the option of 50% VAT deduction. Importantly, according to the new proposal, taxpayers who use a private car in a company will not be required to drive a mileage and are therefore not obliged to include it in their annual tax returns. In the case of “mixed use” there is also no need to register the car with the tax office. Settlement of VAT rates also depends on additional technical tests and technical parameters of the car.
Sale of a car
As the sale of a vehicle used in a company is linked to revenue, in the case of incomplete depreciation, the remainder of the write-down must be fully charged to costs. The sale of a car without VAT is only possible if there was no right to deduct this tax when buying it. Active VAT payers will probably not be able to take advantage of the relief, so sales will be taxed at 23%.
Car withdrawal from the company
It happens that companies withdraw a passenger car, which is then used privately. It is permitted, but if the vehicle is not fully depreciated, the undepreciated part cannot be included in the tax deductible costs. Importantly, if VAT was deducted (in whole or in part) during the sale, then, according to the letter of the law, withdrawals for own use must also be taxed.
The amount of VAT rates for car use in a company still depends on many factors. The new rules are intended to make life easier for entrepreneurs. You will be able to find out how the changes have affected your daily business in the coming years. Unless further modifications are made.