What requirements must be met from April 1 to deduct 100 percent. VAT on cars?
2014 is the time of a revolution in terms of value added tax. The changes affected the basic areas of the companies' activity, such as the moment of the VAT obligation, the date of issuing the invoice, and now also the rules of VAT deduction for cars used in the company. Currently, it is extremely important to determine whether a given vehicle is used exclusively for business purposes or also privately - the rights and obligations of the entrepreneur depend on the intended use of the car. What conditions must be met in order to be able to countdown 100%? input VAT on the purchase and operation of cars used in the company? Let's check.
What has changed in the deduction of VAT on cars?
The regulations in force from April 1, 2014 introduce a number of changes in the field of VAT deduction for the purchase of vehicles and operating expenses incurred on them. First of all, the rule that allows for the deduction of 60% has disappeared, but not more than 6,000. PLN tax on the purchase of a passenger vehicle. Some taxpayers have lost the right to 100% deduction. tax in favor of 50 percent. when spending on the day-to-day operation of the vehicle, others have the option to deduct 100 percent. from the purchase of fuel.
From the beginning of the second quarter of 2014, cars used by companies can be divided into three groups:
- vehicles weighing more than 3.5 tons, from which the taxpayer has the right to deduct 100% VAT, without the need to keep additional records,
- vehicles weighing less than 3.5 tons, which are used only for business purposes, giving the possibility of a 100% deduction, however, after meeting certain requirements (more on this later in the article),
- vehicles weighing less than 3.5 tons, which are used both for business and private purposes - with them, the taxpayer has a limited right to deduct VAT.
Based on the above considerations, two main conclusions can be drawn. First of all, the main premise that the taxpayer has the right to deduct 100 percent from a given vehicle. VAT is to exclude the possibility of using it for non-business purposes. Secondly, the entrepreneur is entitled to this right in two cases:
- if in its activity it uses vehicles over 3.5 tons,
- if the vehicle used below 3.5 tonnes is for business purposes only.
Later in the article, we will look at additional obligations imposed on taxpayers who meet the above-mentioned criteria. conditions and want to deduct 100 percent. VAT on used vehicles.
Cars that cannot be used for private purposes
The first group of vehicles that can be 100% deductible. VAT on their acquisition, operating expenses related to them and the purchase of fuel, are cars weighing more than 3.5 tons, which, due to their design, are hardly used for purposes other than the business. In this case, the condition for using the privilege of full VAT deduction is the possession of documents and certificates regarding the technical parameters of the car obtained, among others from the district vehicle inspection station.
Cars used exclusively for business purposes
The second group of vehicles that allow the entrepreneur to deduct 100 percent. VAT charged on their purchase, operating expenses related to them and fuel, are cars weighing less than 3.5 tons, which are used only for business purposes.
Due to the potential possibility for the taxpayer to use a given vehicle for private purposes, entrepreneurs who have such cars in their companies and want to deduct 100 percent from them. VAT, the legislator has imposed a number of additional registration and record-keeping obligations.
The first requirement for entrepreneurs is to submit a VAT-26 form to the tax office, i.e. information about vehicles used exclusively in business. Importantly, such registration should be made within 7 days from the date on which the first expenditure related to the vehicles subject to notification will be incurred.
In the event that information about cars below 3.5 tons, for which a 100% VAT deduction is planned, is not submitted to the office, the taxpayer loses the right to deduct the tax in this amount in favor of 50%. the VAT amount resulting from the document confirming the cost. If the application is submitted after the deadline, it is possible to fully deduct VAT only from the day the information is delivered to the office
The second necessary condition is to keep detailed records of the vehicle's mileage for VAT purposes. Pursuant to the VAT Act, properly kept records should include:
motor vehicle registration number,
day of beginning and ending keeping records,
the status of the mileage counter of the motor vehicle on the day of starting the record keeping, at the end of each accounting period and on the day of ending keeping the records,
an entry of the person driving a motor vehicle for each use of that vehicle, including:
- next entry number,
- date and purpose of departure,
- route description (where-to-where),
- the number of kilometers traveled,
- name and surname and signature of the person driving the vehicle,
- confirmed by the taxpayer as to the authenticity of the entry of the person driving the vehicle, if he is not a taxpayer;
the number of kilometers traveled at the end of each accounting period and on the date of completion of record keeping.
The third and last obligation giving the right to deduct 100%. VAT on cars in the group of cars below 3.5 tons applies to the determination of the exact rules of using the vehicle in the company. It will be met by creating, for example, appropriate regulations.
Vehicles with a total weight of up to 3.5 tonnes, which do not need to be reported to the Tax Office and which do not require keeping records, and from which the taxpayer can deduct 100%. VAT are:
- compliance with the above requirements must be reflected in an additional technical inspection carried out by a district vehicle inspection station and a relevant entry in the registration certificate;
Cars intended for resale
In the context of the deduction of 100 percent. VAT on cars, do not forget about vehicles that are intended for:
- sales (for vehicles produced by the taxpayer),
- handing over for use on the basis of a rental, lease, leasing or other similar agreement
- if the resale, sale or use of these vehicles for consideration is the subject of the taxpayer's business. If the taxpayer purchased / manufactured the vehicle in the above-mentioned goals, has the right to deduct 100 percent. VAT on their purchase / production, operating expenses and fuel purchase.
Summary - when we deduct 100 percent VAT on the car?
Below we present a summary of considerations on when a taxpayer can deduct 100 percent. value added tax for cars.
100% deduction VAT on cars is due for:
A. Vehicles weighing more than 3.5 tons, the construction of which excludes their use for purposes not related to the activity.
Condition: Possession of proper documentation confirming the technical parameters of the vehicle.
B. Vehicles under 3.5 tonnes that are used exclusively for business purposes.
C. Vehicles purchased / manufactured for resale, sale, handing over for use against payment on the basis of a rental, lease, leasing agreement, etc.
Condition: The sale / resale of cars is the subject of the taxpayer's business.