Kilometers to VAT - new rules for settling VAT on cars from April 1, 2014
Polish entrepreneurs should pay special attention to the changes in tax regulations - because the changes introduced in January 2014 have only been adopted and new ones are already approaching. Another modification of the Act on tax on goods and services and some other acts will affect, inter alia, on the rules for deducting VAT on cars - first of all, allowing taxpayers to deduct 50% of the input VAT from operating expenses for passenger vehicles weighing up to 3.5 tons. This and other news will take effect on April 1, 2014.
Put on the mileage allowance and deduct 100% of the tax
From April, the possibility of deducting 100% VAT on the purchase of a car and operating expenses (which is important - in this case also on fuel) will cease to be the privilege of truck owners. For now, the right to use the deduction will also have those taxpayers who use passenger cars entered in the register of fixed assets in their companies. Good news, but with some additional requirements.
In order to be able to deduct all input VAT on the above-mentioned expenses, the passenger car should be used only for business purposes. The first formality that the taxpayer must complete is reporting such a vehicle to the head of the competent tax office. The VAT-26 form, i.e. information on vehicles used exclusively for business purposes, will be appropriate in this case. The entrepreneur has up to seven days to submit the form from incurring the first expenditure, which will be subject to the first deduction.
After registering the vehicle, it is necessary to prove to the tax office that the car is actually intended for business purposes only. This will be the purpose of the vehicle mileage records and the establishment of the regulations for the use of cars in the company (especially necessary when hiring employees).
Art. 86a (4) of the VAT Act
Motor vehicles are considered to be used exclusively for the taxpayer's business if:
Asset Mileage - Required Items
Keeping vehicle mileage records for a car that is a fixed asset should start from the day on which the entrepreneur declares to use it only for business purposes. So that there is no doubt in this matter, the VAT Act specifies in detail what must be included in such a mileage allowance. The necessary elements of the records are therefore:
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,
entry of the person driving a motor vehicle for each use of this vehicle, including:
- next entry number,
- date and purpose of departure,
- description of the route (from where - where to),
- the number of kilometers traveled,
- name and surname of the person driving the vehicle,
- confirmed by the taxpayer at the end of each accounting period in terms of the authenticity of the entry of the person driving the vehicle, if he is not a taxpayer,
5. the number of kilometers traveled at the end of each accounting period and on the day the records are completed.
The regulations do not indicate when the taxpayer should decide that he wants to declare the use of the car only for business purposes. Such a declaration is also not irrevocable - the entrepreneur has the right to withdraw such a decision and deduct only 50% of the tax.
It is important that in the event of choosing not to keep records and withholding 50% of the input tax, the entrepreneur should not include the remaining 50% of tax in the tax deductible costs - in accordance with Art. 23 sec. 1 point 43 lit. a of the Personal Income Tax Act, input tax should not be included in the costs, unless the taxpayer is not entitled to a deduction in accordance with the regulations. In this case, however, such a right is granted and the entrepreneur decides not to use it himself.
Full deduction without kilometers - special cases
As mentioned at the beginning, entrepreneurs using trucks (i.e. generally understood vehicles with a total weight of more than 3.5 tons) in their activities are entitled to withhold 100% VAT on cars. This rule remains intact - the owners of such cars still do not have to worry about additional records.
Also those taxpayers who have decided to deduct only 50% of VAT will not be obliged to drive kilometers.
VAT 2014 - Nievatowiec can also issue an invoice
However, entrepreneurs will also have the right to withhold 100% of the tax in several other cases. These are vehicles intended exclusively for:
- sales - in the case of vehicles manufactured by the taxpayer,
- handing over for use on the basis of a rental, lease, leasing or other similar agreement,
in a situation where these activities are the subject of the taxpayer's business. The kilometer will also be unnecessary in a situation where, in relation to a motor vehicle, the taxpayer is not entitled to reduce the amount of tax due by the amount of input tax on related expenses.
If the design of the vehicle automatically excludes the possibility of using it for private purposes, the taxpayer also has the right to deduct 100% of the input tax value without creating additional records. The full list of such vehicles is provided for in the act (see box).
Art. 86a sec. 9
if the documents issued in accordance with the road traffic regulations indicate that the vehicle is a special vehicle.