The right to reduce the tax due in connection with the purchase of spare parts for overhauled passenger cars
Letter of 25 March 2010 Tax Chamber in Bydgoszcz ITPP1 / 443-17 / 10 / IK
The right to reduce the amount of tax due by the amount of input tax in connection with the purchase of spare parts for overhauled passenger cars as part of a business related to the sale of used cars and repair of cars.
Based on Article. 14b § 1 and § 6 of the Act of August 29, 1997 - Tax Ordinance (consolidated text Journal of Laws of 2005, No. 8, item 60, as amended) and § 4 of the Regulation of the Minister of Finance of 20 June 2007 on the authorization to issue interpretations of tax law (Journal of Laws No. 112, item 770, as amended). The Director of the Tax Chamber in Bydgoszcz, acting on behalf of the Minister of Finance, states that your position presented in the application of December 22, 2009 (received on January 8, 2010), for a written interpretation of the tax law regarding value added tax in the scope of deduction of input tax on expenses related to the sale of second-hand goods accounted for on a margin basis - is correct.
On January 8, 2010, an application was filed for a written interpretation of the tax law regarding value added tax with regard to the deduction of input tax on expenses related to the sale of second-hand goods accounted for on a margin basis.
The following facts are presented in the present application.
You run a car repair shop as well as buy and sell cars. You most often buy vehicles from people who do not run a business on the basis of a sale and purchase agreement. Some of these cars require minor repairs. You buy car parts for them, and then these cars are sold under the VAT margin system, because they are purchased for commercial purposes.
The following question was therefore asked.
Do you have the right to deduct tax on goods and services from VAT invoices documenting the purchase of parts for these cars or the purchase of services ...
In the opinion of the Applicant, you have the right to deduct tax on goods and services from the above-mentioned VAT invoices, because Art. 120 paragraph 19 of the Act on tax on goods and services provides that there is no right to deduct input tax from purchased, inter alia, second-hand goods, if these goods are sold on a margin basis. The prohibition of deducting input tax applies only to the goods, i.e. the car, which is traded. It does not apply to other expenses, including parts for their repair.
In the light of the applicable legal status, the Applicant's position on the legal assessment of the presented facts is considered correct.
Pursuant to Art. 86 sec. 1 of the Act of March 11, 2004, the act on tax on goods and services (Journal of Laws No. 54, item 535, as amended), to the extent that goods and services are used to perform taxable activities, the taxpayer referred to in Art. 15, has the right to reduce the amount of tax payable by the amount of the input tax, subject to article 22. 114, art. 119 paragraph. 4, art. 120 paragraph 17 and 19 and article. 124.
It follows from the cited provision that the taxpayer is entitled to reduce the output tax by input tax to the extent that the acquired goods and services are used to perform taxable activities. Therefore, in order for the taxpayer to have the right to reduce the output tax by the input tax resulting from the received VAT invoices, the purchases documented with these invoices must be directly and indisputably related to the taxable activities performed by him.
Pursuant to Art. 120 paragraph 19 of the Act, the reduction of the amount or the refund of the difference due to the taxpayer shall not apply to second-hand goods, works of art, collectors' items and antiques purchased by the taxpayer, if they were subject to taxation in accordance with paragraph 4 and 5 (margin system).
On the other hand, Art. 120 paragraph 4 of the Act stipulates that in the case of a taxpayer performing activities consisting in the supply of second-hand goods, works of art, collectors' items or antiques previously acquired by that taxpayer for business purposes or imported for resale, the taxable amount is the margin constituting the difference between the total amount pay the buyer of the goods, and the purchase amount, less the amount of tax. This means that the lack of the right to deduct the input tax on the goods and services purchased by you applies only to the purchase of second-hand goods, the supply of which was taxed under the margin scheme. The buyer of the goods is not entitled to deduct input tax on margin taxation.
Taking into account the above, it should be stated that you are entitled to deduct the input tax on the purchase of parts for car repairs, despite the fact that the sale of cars will take place under the margin scheme. These parts are not used goods within the meaning of Art. 120 paragraph 1 point 4 of the Act, the supply of which could be taxed under the margin system and, consequently, affect the right to deduct input tax.
Summing up the expenses incurred by you related to the purchase of parts for car repair, used for business activities, constitute the basis for reducing the output tax by input tax related to these purchases to the extent that they are used to perform taxable activities.
The interpretation concerns the actual state presented by the Applicant and the legal state in force on the date of the event.
The party has the right to lodge a complaint against this interpretation of tax law due to its inconsistency with the law. The complaint is lodged with the Provincial Administrative Court in Białystok, ul. Sienkiewicza 84, 15-950 Białystok, after a prior written request from the authority which issued the interpretation within 14 days from the date on which the complainant learned or could learn about its issuance - until the violation of the law was remedied (Article 52 § 3 of the Act on on August 30, 2002 - Law on proceedings before administrative courts - Journal of Laws No. 153, item 1270, as amended). A complaint to the Voivodship Administrative Court (in two copies - Art. 47 of the above-mentioned Act) shall be lodged within thirty days from the date of delivery of the authority's response to the summons to remedy the infringement of the law, and if the authority did not reply to the summons, within sixty days from the date of submitting the complaint. summons (Art. 53 § 2 of the above-mentioned Act).
The complaint is lodged through the body whose action or inaction is the subject of the complaint (Article 54 § 1 of the above-mentioned Act) to the following address: Tax Chamber in Bydgoszcz, National Tax Information Office in Toruń, ul. St. Jakuba 20, 87-100 Toruń.
33590 Journal of Laws 2011.177.1054: Art. 86 sec. 1; art. 120 paragraph 4