Fuel card and the possibility of deducting VAT on purchases


The fuel card is a popular tool for cashless settlement of purchases made at gas stations. The customer with such a card is entitled to purchase fuel and other products at selected stations, without the need to have cash or a payment card. The fuel card is mainly used for convenience. In this article, we explain whether it is possible to deduct VAT on fuel purchases shown on VAT invoices documenting the purchase with a fuel card.

When can VAT be deducted on business purchases?

The issue of the right to deduct VAT on purchases is regulated in detail by the provisions of the Value Added Tax Act. Pursuant to Art. 86 sec. 1 of the VAT Act, the right to reduce the amount of tax due by the amount of input tax is due to the taxpayer to the extent that the goods and services are used to perform taxable activities.

Thus, the right to deduct input tax from purchase invoices is vested in an entrepreneur who:

  1. meets the definition of a taxpayer contained in art. 15 of the Act;
  2. purchases certain goods and services in order to use them for activities subject to VAT.

It is also worth mentioning that the right to deduct input tax applies only to those goods and services for which such deduction is permitted by law. A popular example of a situation in which taxpayers cannot deduct VAT from an invoice is the purchase of a hotel service - despite receiving a VAT invoice with the tax amount, the entrepreneur is not entitled to reduce the output tax by the amount of input tax, because in accordance with the provisions of the hotel services act ( accommodation etc.) have been excluded from this possibility. In addition, the VAT invoice documenting the expenditure should contain all the necessary elements.

The fulfillment of the above conditions is the only and absolute condition for the entrepreneur to have the right to deduct VAT from cost invoices.

Deduction of VAT on the purchase of fuel for vehicles

The changes to VAT regarding cars in the company, which entered into force on April 1, 2014, are undoubtedly one of the most important amendments that have taken place so far in relation to tax regulations. The legislator, taking into account the technical parameters of the vehicles, divided them into 3 groups. Assigning the vehicle to one of the 3 groups indicates the amount in which the taxpayer is entitled to deduct input tax from VAT invoices on purchases related to the vehicle - 50% or in full.

Entrepreneurs using private passenger cars in their companies are well aware of the changes to the regulations that took place on July 1, 2015 and which regulate the VAT deduction on the purchase of fuel for passenger cars. The favorable changes included the possibility of deducting 50% of the amount of input tax on the purchase of fuel indicated on VAT invoices. Until the end of June 2015, this right was limited and only related to operating expenses.

Fuel card - VAT deduction on fuel purchase

Deduction of VAT on the purchase of fuel settled in a non-cash form, i.e. using a fuel card, raises many doubts among taxpayers. However, the regulations are clear - provided that the above-mentioned conditions are met, the entrepreneur is entitled to deduct the input tax on the company purchase. A taxpayer who purchased goods and services using a fuel card may deduct input VAT from VAT invoices documenting such a purchase, provided that they are related to taxable activities.

The above position was confirmed by the Director of the Tax Chamber in Warsaw in the individual ruling of June 15, 2015, file ref. IPPP1 / 4512-420 / 15-2 / IGo. The request for an individual interpretation specifically related to the right to deduct 50% of VAT from July 1, 2015, shown on VAT invoices documenting the purchase of goods and services by the company using fuel cards.

According to the position of the authority: (...) from 1 July 2015, the Company will be entitled to deduct 50% of the input tax amount, in accordance with Art. 86a paragraph 1 of the Act of March 11, 2004 on tax on goods and services, shown on VAT invoices issued for her by Y, and documenting the purchase of goods and services (including fuel) with the use of fuel cards, which the company uses on the basis and on the basis of the rules specified in the contract concluded with Y.