A motorhome in business and costs

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The COVID-19 pandemic has changed travel habits. Campers eagerly used during restrictions, as well as when hotels and guesthouses are open, have become very popular as a safer alternative. Some entrepreneurs decide to buy a motorhome to rent or use it in business, e.g. as a mobile office or as part of business trips. A motorhome in a business can have many uses, facilitate business in times of a pandemic and contribute to increasing profits, it all depends on the specifics of the business and the entrepreneur's ingenuity. Therefore, let's analyze whether the expense for the purchase of a motorhome and the operating costs associated with it can be classified as tax deductible costs.

What are tax deductible costs?

Tax deductible costs are all expenses related to the cause-and-effect relationship with the income generated in the course of business activity, excluding those stipulated in the Income Tax Act as non-tax deductible expenses.

Art. 22 sec. 1 of the PIT Act:
Tax deductible costs are costs incurred in order to achieve income or to maintain or secure the source of income, with the exception of the costs referred to in article 1. 23.

Thus, tax deductible costs are all rationally and economically justified expenses related to the activity, the purpose of which is to achieve, secure or maintain a source of income. Each expense must be properly documented to be a tax expense in the company.

A motorhome in business

The catalog of tax deductible costs is open. The specificity of the conducted business activity determines which expenses can be classified as costs. The cause-and-effect relationship between incurring an expense and obtaining income or maintaining or securing its source should be assessed individually by each entrepreneur. It should be remembered that in the event of a possible inspection, it is the taxpayer's responsibility to prove that the expenditure is related to the business activity conducted.

A motorhome in a company can be used for various purposes, e.g. it can be used for rent in a company providing rental services, it can be a component of costs related to a tourist trip in a company selling camping trips by a motorhome, or it can be used by employees as part of business trips in the field.

Tax deductible costs and vehicles

The regulations provide for limitations in the possibility of including expenses as tax deductible costs from expenses related to the purchase of passenger vehicles and their operation. However, these limits do not apply to expenses related to vehicles other than passenger cars. Expenses for the purchase and for the operation of vehicles that do not meet the definition of passenger cars may be recognized in full, of course, provided that they are recognized as tax deductible costs, i.e. when they are properly documented, rationally and economically justified expenses related to the activity aimed at achieving , securing or maintaining a source of income that has not been specified in Art. 23 of the PIT Act.

The key issue is therefore to determine whether a motorhome belongs to the group of passenger cars. Depending on its type, the vehicle may be included in the group of passenger cars within the meaning of tax regulations (motor vehicles within the meaning of road traffic regulations with a permissible total weight not exceeding 3.5 tons, designed for the transport of no more than 9 people, including the driver) or not meet the definition of a motor vehicle.

Art. 5a point 19a of the Personal Income Tax Act
Passenger car - this means a motor vehicle within the meaning of road traffic regulations with a maximum permissible weight not exceeding 3.5 tons, designed to carry no more than 9 people, including the driver, with the exception of:

a) a motor vehicle with one row of seats, which is 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,

b) a motor vehicle with 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,
c) a special vehicle, if the documents issued in accordance with the road traffic regulations show that the vehicle is a special vehicle, and if the conditions contained in separate regulations, specified for the following purposes, are also met:

- electric / welding aggregate,
- for drilling works,
- excavator, backhoe-bulldozer,
- charger,
- lift for maintenance and assembly works,
- truck crane,
d) a motor vehicle specified in the regulations issued on the basis of art. 86a paragraph 16 of the Value Added Tax Act.

When purchasing a motorhome, it is therefore necessary to determine whether the vehicle meets the definition of a passenger car. If so, the entrepreneur is generally subject to a limit on the recognition of expenses related to the purchase and operation. Active VAT taxpayers using the vehicle for taxable activities are then entitled to a 50% VAT deduction, and they may include 75% of incurred expenses in tax costs. The entrepreneur may, however, declare the company type of campervan disposal, deduct the full VAT and include all expenses incurred as tax costs, however, in such a situation, he is obliged to submit a VAT-26 form to the tax office, establish the terms of use of the vehicle and keep a record of the vehicle mileage.

It should be emphasized that pursuant to Art. 86a paragraph 5 point 1 of the condition of keeping records of the mileage of the vehicle shall not apply in the case of motor vehicles intended only for:

  1. resale;

  2. sale, in the case of vehicles manufactured by the taxpayer;

  3. 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.

This means that if the rental of vehicles is the subject of the taxpayer's business and the motorhome will be intended only for rental, it is not necessary to submit VAT-26 form and keep a record of the vehicle mileage in order to fully deduct VAT and settle operating costs related to the motorhome. .

In the event that a motorhome in business does not meet the definition of a passenger car, all expenses related to it are subject to settlement in costs without limitation, the regulations also do not provide for a limitation in the deduction of VAT. The taxpayer may then enter the motorhome into the fixed assets register, and then make depreciation write-offs from it, constituting tax deductible costs in full. An entrepreneur who owns a motorhome that does not meet the definition of a passenger car will also settle the full amount of expenses for the operation of the vehicle.

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A motorhome in business activity - individual interpretation

The individual ruling of April 6, 2021 (reference number 0113-KDIPT2-1.4011.1028.2020.4.MD) issued by the Director of the National Tax Information concerned the recognition of depreciation write-offs and operating expenses related to the use of a motorhome in business activities as tax deductible costs.

An applicant who is an active VAT taxpayer, applying a flat tax in business on the basis of a tax revenue and expense ledger, conducts business in the production of concrete construction products (PKD 23.61.Z), rental and lease of other motor vehicles (trucks, passenger cars, special vehicles), excluding motorcycles (PKD 77.12.Z) and rental of real estate, fixed assets (mainly construction machinery, such as excavators, loaders). He plans to buy a vehicle (motorhome) with a maximum permissible weight of more than 3.5 tons, which will be registered as an M1 special car and will incur expenses related to the motorhome, incl. for the purchase of a vehicle, fuel or other operating costs. The applicant points out that due to the limitations caused by the COVID-19 epidemic, away meetings to the construction sites have become difficult (hotel restrictions, restrictions on the number of meetings, no meetings in barracks or containers due to statutory restrictions). For this reason, there is an increased demand for mobile offices - mainly campers, from the companies conducting such projects. Assuming that the motorhome will be used only for the purposes of economic activity subject to VAT (e.g. it will be rented to other economic entities), and the expenses related to the vehicle will be incurred in order to achieve revenues or to preserve or secure the source of income, the applicant asked a question, whether it can enter the vehicle into the register of fixed assets and intangible assets and make depreciation write-offs constituting tax deductible costs in full, as well as recognize expenses for the operation of the vehicle as tax deductible costs in full.

The Director of the National Revenue Administration stated:

“As indicated in the application, the Applicant intends to purchase, on the basis of a VAT invoice, a vehicle (motorhome) with a gross vehicle weight (GVW) above 3.5 tonnes (the motorhome will be registered as an M1 special car). Therefore, in the light of the above-mentioned definition contained in Art. 5a point 19a of the Personal Income Tax Act, it will not constitute a passenger car. In view of the above, it should be stated that since the car indicated in the application will not be a passenger car, the reduction of operating costs referred to in Art. 23 sec. 1 point 46a of the Personal Income Tax Act, shall not apply. […]

[...] the vehicle (motorhome) that the Applicant intends to purchase will not be a passenger car in accordance with the above-mentioned regulations. Therefore, the restriction referred to in Art. 23 sec. 1 point 4 of the Personal Income Tax Act. In view of the above, provided that the vehicle (motorhome) in question meets the conditions to be considered a fixed asset that will be used in its business activities, the Applicant will be able to include depreciation write-offs from its initial value as tax deductible costs, without any quantitative restrictions ”.