You can depreciate your spouse's car in a business!

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A car in business may turn out to be indispensable. Often, however, taxpayers wonder how to buy it - buy it, lease it, or maybe introduce a private car into business? Bringing a private vehicle into your business can prove to be an interesting option. The situation seems simple when the taxpayer owns the vehicle, but what if the owner is the wife? How does this affect the billing method? Can you depreciate your spouse's car in your business?

Fixed asset - definition

To recognize an asset as a fixed asset, it must meet the conditions set out in Art. 22a paragraph. 1 of the PIT Act:

  1. the component must be owned or jointly owned by the taxpayer,

  2. complete and serviceable,

  3. acquired or manufactured on its own,

  4. the expected lifetime of the component must be greater than 1 year.

Therefore, if the component meets the above conditions, it becomes the company's property and is included in the fixed assets register. In the case of fixed assets with a value of more than PLN 10,000 PLN (net for active VAT payers, gross for exempted persons) is depreciated over time according to the adopted depreciation method.

An asset that meets the first four conditions, but its value is lower than PLN 10,000, is a low-value fixed asset, which is not required to be recognized in the register of fixed assets and can be booked directly in tax costs in full in col. 13 KPiR - other expenses . You can read more about the classification of assets in the article: Fixed asset or equipment? Or maybe an ordinary expense?
The exception is a private car introduced to the company, which must always be included in the fixed assets register.

Example 1.

Mr. Paweł runs a carpentry company and is an active VAT payer. In December 2019, he purchased a passenger car for the company, the value of which is PLN 50,000 net. Should the component be included in the register of fixed assets and depreciated?

Yes, Mr. Paweł should introduce the vehicle to the company's fixed assets and make depreciation write-offs.

Example 2.

Mr. Arkadiusz runs a transport company. He is an active VAT taxpayer and he purchased a passenger vehicle worth PLN 8,000 net. Is it required to bring an asset to the company and amortize it over time?

No, due to the low initial value of the car, there is no obligation to enter the vehicle into the fixed assets register. Nevertheless, the taxpayer has such a possibility, and in the case of low value, he can use the one-time depreciation of components up to PLN 10,000.

Determining the initial value of the car

Determining the initial value is of great importance for subsequent depreciation, therefore it is important to make the determination correctly. In the case of a vehicle that was purchased by way of purchase, the purchase price is used to determine the initial value, if the taxpayer has a purchase document, if not, the market price is assumed. The same rules apply to the valuation of a vehicle that is a private component of the entrepreneur transferred for business purposes.

The purchase price is the amount due to the seller increased by the costs incurred until the asset is entered into the records (car re-registration costs, costs of transport and insurance on the way, stamp duties, etc.), less the deductible VAT (in the case of active VAT payers) .

Spouse's car in the company

The entrepreneur may transfer his private asset for business purposes. For this, however, he is required to draw up a special statement on the transfer of private property to the company.

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It is also possible to introduce an asset into the business that is not owned by the taxpayer, but by his spouse. However, certain conditions must be met. The spouses must have joint property and the vehicle must be acquired during the marriage and must be used in the business activity of one of the spouses.

The spouses do not have to enter the vehicle lending agreement if they have joint property. Confirmation of the above is the individual interpretation of the Director of the National Tax Information of August 1, 2019, ref. 0114-KDIP3-1.4011.323.2019.1.MJ, where we read: "Concluding a purchase and sale agreement or a car rental agreement with the spouse, acquired during the marriage from joint funds, is pointless, because this subject is the statutory marital unity (joint)”.

If both spouses conduct separate economic activities and decide to use the vehicle in both activities, then the vehicle may be a fixed asset in both companies, but this will affect the determination of the initial value of the component.

Therefore, since it is possible to introduce an asset that belongs to a spouse into the business, it is also possible to depreciate it, both when the taxpayer introduces the car to one activity and when both use the vehicle in their separate companies. Only the method of pricing these vehicles will be different. If the vehicle will be used in its entirety in one company, then the initial value will be the full purchase value (if the entrepreneur has an invoice or a sale and purchase agreement) or the market value (if the taxpayer does not have a proof of purchase). In a situation where the spouses decide that they want to use the same vehicle in both activities, then the initial value of the vehicle in each of the activities will be half of the purchase / market price.

Example 3.

Mr. Mariusz runs a sole proprietorship. He would like to bring a car owned by his wife into the company. She has made a commitment not to use the vehicle in her company. Is it possible to introduce this vehicle to the company by Mr. Mariusz?

Yes, Mr. Mariusz can introduce the car to his company. Since the wife will not use the car in its activities, then the initial value of the vehicle should be the full value from the purchase document.

Example 4.

Ms. Martyna and her husband run two separate businesses. They have a vehicle worth PLN 60,000 that they want to use in both activities. Is it possible for this car to be an asset in both activities? How to make a car valuation in this case?

It is possible for the vehicle to be an asset in both activities. The initial value in the business of Ms Martyna should be PLN 30,000 and for Martyna's husband - another PLN 30,000.

To sum up, a taxpayer running a business may depreciate his spouse's car in his business if there is no separation of property between them and the vehicle was purchased during the marriage. Otherwise, it would be necessary to write down, for example, a loan agreement.