The rent for the parking lot is included in the costs of the economic unit

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Entrepreneurs who use a car in their business incur a lot of expenses related to it. However, in the case of some of them, the possibility of including them as tax costs raises doubts. This is also the case with the expenses incurred for the rent for the parking lot for the vehicle. Can it be included in the tax costs? We answer below.

Expenses classified as tax deductible costs

In order to answer the question of what expenses can be classified as tax costs, it is necessary to familiarize yourself with the definition of tax deductible costs.

Thus, deductible costs include expenses incurred in order to achieve income, maintain or secure the source of income, with the exception of the costs listed in art. 23 sec. 1 of the PIT Act. However, in order for the incurred expenses to be classified as tax costs, they must be related to the conducted activity.

Car related expenses in tax costs

Taking into account the above definition of tax costs, it can be stated that some expenses related to the use of a car in a company can undoubtedly be classified as tax costs. They include, among others these on:

  • purchase of a company car,

  • purchase of fuel for a vehicle used in the business,

  • purchase of parts for a vehicle used in the business,

  • highway tolls.

However, the rent for parking for a car is not a typical cost, which can be included in the tax costs without hesitation. So, can this expense be classified as tax costs?

Can the rent for the parking lot be included in the tax costs?

In a situation where the entrepreneur has his registered office outside the place of residence, it is obvious that he must travel to the place of his activity. So if he commutes by car, he will need a parking space.

One should also pay attention to Art. 23 (1) of the PIT Act, indicating expenses that cannot be classified as tax costs - the rent for the parking lot was not mentioned among them.

Although the rent for the parking lot does not directly translate into the company's revenues, which is a condition for including a given expenditure as tax costs, it enables the entrepreneur to run a business. Moreover, by leaving the car in a secured parking lot, the entrepreneur protects it from damage and also reduces the risk of the vehicle being stolen.

So if the entrepreneur parks the car that is part of the company's assets near the company's headquarters, the rent for the parking may be included in the tax costs.

The rent for the parking lot is entered in the Book of Income and Expenditure in column 13 as Other expenses.

The rent for the parking lot and the deduction of 50% VAT for the car

As regards the possibility of deducting VAT from the parking rent, this deduction depends on the type of car and the way it is used in the company. Typically, the vehicle used in business activities is a personal car, both for business and private use. The entrepreneur is entitled to a 50% VAT deduction from such a car. Therefore, if the entrepreneur uses a passenger car for mixed use and pays the rent for the parking lot, he is entitled to a 50% VAT deduction from this expense.

The rent for the parking lot and 100% VAT deduction for the vehicle

However, in some situations it is possible to deduct 100% VAT on the parking rent. This is possible in the case of cars used exclusively for business purposes, which have been reported on VAT-26 and for which the mileage is kept.

In addition, this applies to situations where:

  • the entrepreneur has several cars, including those with the possibility of deducting 100% VAT,

  • a parking space for which the rent pays can be used by entrepreneurs, employees or contractors.

In this case, the rent for the car park is treated as a general expense related to the conducted activity. It is not directly related to a specific vehicle.

This is confirmed by the individual interpretation No.IPPP1 / 4512-220 / 16-2 / EK of April 7, 2016, issued by the director of the Tax Chamber in Warsaw, in which he presented his position - in the case of the Company's expenses for the rental of office space along with the rented parking spaces, incurred jointly for individual rental components, where no specific cars are assigned to the rented parking spaces, the limitation of the right to deduct input tax referred to in Art. 86a of the Act, because these expenses are general costs indirectly related to the business activity conducted by the Applicant. As indicated by the Applicant, the rented parking spaces will be used by the Company's employees and customers of the Company, moreover, the real estate rental agreement does not provide that specific vehicles are to be parked in specifically rented parking spaces.

The same position is presented in the individual interpretation no.IPPP3 / 4512-508 / 15-2 / ISZ of September 7, 2015 - The application shows that the rental of parking spaces (underground and above-ground) is not an expense strictly related to the Company's company vehicles. Therefore, in the case of these expenses, the limitation of the right to deduct input tax referred to in Art. 86a of the Act.

Thus, the expenses incurred for rent (...) constitute general expenses related to the activities conducted by the Applicant. These expenses are indirectly related to the fact that the Company obtains turnover subject to tax on goods and services.

Thus, due to the use of the incurred expenses for the rental of individual properties with parking spaces belonging to them, for taxable activities, the Applicant will have the full right to deduct the input tax in accordance with the provisions of Art. 86 of the Act.

As can be seen from the above, the entrepreneur may include as tax costs the rent for the parking lot of the car used in the business. However, the possibility of deducting VAT on this expenditure depends on the way the vehicle is used in the company.