Conversion of a truck into a passenger car and excise duty
As a rule, the purchase of a passenger car is subject to excise duty. It is important that only the personal nature of the vehicle gives rise to a tax obligation. As a result, entrepreneurs often convert cars from lorry to passenger and from passenger to lorry. Therefore, it is worth considering the consequences of converting a truck into a passenger car in terms of excise duty.
Vehicle destination and excise tax
Passenger cars are subject to excise duty. Pursuant to Art. 100 sec. 1 of the Excise Duty Act, in the case of a passenger car, the subject of taxation with excise duty is:
- import of a passenger car not previously registered in the territory of the country in accordance with road traffic regulations;
- intra-Community acquisition of a passenger car not previously registered in the territory of the country in accordance with the road traffic regulations;
- first sale of a passenger car on the territory of the country not registered in the territory of the country in accordance with the road traffic regulations:
produced on the territory of the country,
from which the excise duty has not been paid for the activities referred to in point 1 or 2.
The definition of a passenger car can be found in Art. 100 sec. 4 of the Excise Tax Act. According to this provision, passenger cars are motor vehicles and other motor vehicles falling within CN code 8703 intended principally for the carriage of passengers, other than those falling under heading 8702, including passenger and goods vehicles (station wagons) and racing cars, excluding motor vehicles and other vehicles that do not require registration in accordance with road traffic regulations. Accordingly, motor vehicles intended for the transport of goods classified under CN code 8704 are not subject to excise duty.
As indicated by the Voivodship Administrative Court in Kielce in a favorable judgment of 27.10.2011, I SA / Ke 473/11, when the design and equipment of the vehicle indicate that the vehicle is mainly intended for the transport of people, and the carriage of goods is its byproduct function, then such a vehicle should be classified as CN 8703 passenger cars subject to excise duty. However, if the main purpose of a given car is the transport of goods, and the transport of passengers is only a supplement to the vehicle's functionality, then such a vehicle should be classified as CN 8704 trucks not subject to excise duty. As a result, vehicles intended for the transport of goods (lorries) are not taxable.
Conversion of a truck into a passenger car
A detailed analysis of the provisions of the Excise Duty Act shows that only passenger cars not registered in the territory of the country are subject to excise duty, thus the service of converting a truck into a passenger car is subject to excise duty only if the conversion is made before the first registration of such a car.
However, if the vehicle (truck) is first registered in the territory of the country, and then it is converted into a passenger car, then such activity is not subject to excise duty.
The above is also confirmed by the Director of the Tax Chamber in Katowice in the individual ruling issued on February 1, 2010, No. IBPP3 / 443-857 / 09 / DG, where we read:
However, in a situation where the Applicant, after the intra-Community acquisition of trucks, registers them, in this capacity, in accordance with the road traffic regulations, and then converts them into passenger cars, this activity does not fall within the subject of taxation specified in Art. 100 of the act.
Accordingly, the conversion of a heavy goods vehicle registered as such in the territory of the country into a passenger car does not result in an obligation to pay excise duty, and thus the obligation to pay excise duty. "
Additionally, it is worth pointing to a very important judgment of the Supreme Administrative Court on April 5, 2016, file ref. no. I GSK 883/14, in which the court emphasized that the temporary change of use of the car in order to avoid paying excise duty constitutes an abuse of law. The most important passages from the judgment below:
“In the opinion of the Supreme Administrative Court, the short-term and reversible nature of the changes proves their temporary nature, and the factual circumstances of these changes prove that these actions were aimed solely at tax benefits, including in particular non-payment of excise duty. The nature of the changes made to the vehicle is convincing, as they deprived the car of the elements characterizing goods falling within CN code 8703. Two seats, no windows along the two-sided panels, no windows in the rear doors and the tailgate, a partition installed and the interior of the vehicle was not fitted in such a way associated with the passenger part of the vehicle. These changes do not entitle - due to their wide scope - to accept the taxpayer's assertion that it was only about the possibility of deducting VAT by the potential buyer of the vehicle. It should also be added that the Company itself explicitly indicated in the excise duty case that these activities were aimed at reducing the fiscal burden. In such a factual situation, in the opinion of the Supreme Administrative Court, the claim by both the tax authorities and the Court of first instance about the abuse of law is fully justified.
In the opinion of the Supreme Administrative Court, the misuse of the excise tax exemption provided for non-passenger cars (CN 8704) for cars which have been temporarily changed to non-passenger cars leads to an abuse of the law.
It was reasonably assumed that a passenger car classified under CN code 8703 was subject to taxation.
Summarizing the above considerations, it should be stated that if a truck is imported or purchased in the territory of the country, it is registered as a truck, and then the truck is converted into a passenger car, then the obligation to pay excise duty will not arise. However, in a situation where, before the first registration in Poland, the truck is converted into a passenger car, the excise duty will arise.