The date of the first expense and the car in the company

Service-Tax

Taxpayers using motor vehicles only for business activities, for which they are required to keep a record of the vehicle mileage, are required to submit information about these vehicles to the head of the tax office within 7 days from the date on which they will incur the first expenditure related to these vehicles. Due to the different times when the first expenditure occurs, it is worth taking a closer look at what the date of the first expenditure means in practice.

How to interpret the date of incurring the first expenditure in relation to the VAT-26 information

The first expenditure related to motor vehicles used exclusively for business purposes applies only to cars for which the taxpayer is entitled to a 100% VAT deduction, i.e. in relation to vehicles:

  • designed for the transport of at least 10 people, including the driver, if the documents issued on the basis of road traffic regulations indicate such purpose,

  • other than passenger cars, having one row of seats separated from the part intended for the carriage of goods by a wall or a permanent partition:

  • classified on the basis of road traffic regulations into the following subtype: multi-purpose, van or

  • with an open part intended for the transport of loads,

  • other than passenger cars, which have a driver's cabin with one row of seats and a body intended for the carriage of loads as structurally separate elements of the vehicle,

  • special,

  • used exclusively for the taxpayer's business activity, which is understood by the legislator as motor vehicles which:

  • the manner of using these vehicles by the taxpayer, in particular those specified in the rules of their use established by him, additionally confirmed by the vehicle mileage records kept by the taxpayer, excludes their use for purposes not related to business activity or

  • the design of these vehicles precludes their use for non-business purposes or makes their non-business use irrelevant.

Time limit for the first expense

The date of incurring the first expenditure related to a vehicle intended solely for business purposes should be understood as the moment strictly related to its purchase, possession or the intention to own it in the future. Therefore, the first expenditure related to a vehicle intended solely for business purposes may not be incurred earlier than the moment of its purchase or the advance payment of its purchase. Consequently, the moment of incurring the first expenditure should be considered the day on which the taxpayer acquired the right to dispose of the given vehicle as the owner.

First expense and VAT-26 notification deadline

The taxpayer, based on art. 12 of the Tax Ordinance may clarify the rules for determining the deadline for reporting a motor vehicle as used exclusively for business activity. When calculating the deadline, the day on which the expense related to the motor vehicle was incurred should be omitted. For if the beginning of the period specified in days is an event, the day on which it occurred is not taken into account.

On the other hand, the end of the period should be the day of the last of the designated number of days. Of course, it may happen that the last day will fall on a Saturday or Sunday or even on a public holiday, which is a statutory holiday. In this case, the last day of the term should be postponed to the first business day after that day, and if there are several days off, then to the first business day after these few days. Thus, when the 7-day deadline for submitting VAT-26 information ends on the weekend, the last day for submitting VAT-26 information will be Monday.

Date of first expenditure and modernization of the motor vehicle

The entrepreneur purchased two new passenger cars for his company. The cars were collected on November 20, 2018.
and on the same day he received invoices with the date of issue the same as the date of receipt and the payment date on December 10, 2018. Due to inattention, he left the invoices in the vehicles and forgot to deliver to the accounting, which resulted in the VAT-26 declaration being submitted on December 4, 2018. The vehicles were registered On November 28th and November 29th, 2018, a register of kilometers was introduced for VAT purposes. The entrepreneur has developed rules in which he has concluded the conditions for the use of vehicles by employees. Additionally, in December 2018 the vehicles were modernized in such a way that they met the requirements of Art. 86 a sec. 9 of the VAT Act, i.e. a motor vehicle entitling to deduct 100% VAT from operating costs. This was also confirmed by a certificate of additional technical tests of these vehicles carried out by the district vehicle inspection station, which made appropriate entries in the registration certificates - a special car.

In this situation, the date of the first expenditure for these vehicles is November 20, 2018, because the use of these vehicles by the entrepreneur was supposed to be solely for the purposes of economic activity. However, due to the fact that all the conditions required by the regulations are not met, they will be able to make a 100% deduction of VAT on operating costs after the date of modernization.

The above is also confirmed by the Interpretation of the Director of the Tax Chamber in Poznań
of February 8, 2017, ref. no. 3063-ILPP1-1.4512.165.2016.2.MJ.

Assembly of parts and subsequent purchase of the vehicle

The entrepreneur purchased a passenger car on November 14, 2018 and received the purchase invoice on that date. In addition, he ordered retrofitting of a given vehicle with parts that he had at his disposal and which he had previously purchased (before purchasing the vehicle). Therefore, the entrepreneur has doubts as to the date of incurring the first expenditure.

In this case, the date of incurring the first expenditure related to the passenger car is the date of its purchase. On the other hand, the retrofitting of this vehicle, parts purchased before the purchase of a given car, do not affect the determination of the date of incurring the first expense.

The absolute condition for determining the date of the first expenditure related to a specific car is its presence in the company or placing an order for it with the intention of purchasing it, confirmed by the advance payment.

The confirmation of the above is also the Interpretation of the Director of the Tax Chamber in Warsaw
of February 20, 2015, ref. no. IPPP1 / 443-1478 / 14-2 / ​​AW.

Registration fees and the date of the first expense incurred

The entrepreneur purchased a passenger car for business purposes only on November 24, 2018 (date of issue) and received an invoice for the purchase on that date. On December 8, 2018, he registered the vehicle. On December 12, 2018, the vehicle was reported using the VAT-26 form. The entrepreneur will use the car himself. From the moment of receiving the vehicle, a register of kilometers has also been kept for VAT purposes. The car will be parked only on the premises of the company, while the entrepreneur will use it only during working hours for business trips only. Additionally, the car will be equipped with a GPS and a taximeter. The owner of the company wonders if he correctly entered the date of the first expenditure on December 8, 2018, in which he incurred the costs of vehicle registration, recognizing that in relation to a given car, the first related expenditure should be identified only from the moment of registration.

As it turns out, this is the wrong approach. The date of purchase and incurring the first expense is the date of delivery of the goods by the seller, i.e. the physical receipt of the vehicles by the Company from the seller, i.e. November 24, 2018. Of course, it happens more than once that on the day of receipt, the car does not have assigned registration numbers yet. However, this is not a reason to submit a VAT-26 declaration after receiving the numbers. It also depends on the fact that the date of incurring the first expenditure refers to the expenditure related to taxable activities subject to the VAT Act. Thus, the first expense was made on the day the car was released. On the other hand, after receiving the registration numbers, the entrepreneur should update the VAT-26 notification and include the assigned registration numbers.

The above position is confirmed by the interpretation of the Director of the Tax Chamber in Warsaw
of February 19, 2016, ref. no. IPPP1 / 4512-1342 / 15-2 / KR.