Vehicle registration and vehicle entry in the fixed assets register?

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When buying a used car, you can leave your existing registration plates or replace them. Does car registration decide about entering the vehicle into the fixed assets register?

When can an asset constitute a fixed asset in an activity?

It should be recalled that fixed assets are structures, buildings and separately owned premises, machinery, equipment and means of transport. In order to be able to enter a given component in the fixed assets register, the following conditions must be met:

  • the asset is owned or jointly owned by the taxpayer;
  • was purchased or manufactured on its own;
  • it is complete and serviceable on the day it is accepted for use;
  • the expected period of their use is longer than one year;
  • it is used by the taxpayer for the purposes related to his business activity or put into use on the basis of a rental, lease or leasing agreement.

A complete and operational car - what does it mean?

Tax regulations do not indicate the moment when the fixed asset becomes complete and suitable for use in business. This is because whether an asset is complete and fit for use depends on its individual characteristics, nature and purpose. Therefore, it is impossible to clearly indicate when a given asset is complete and fit for use.
It is therefore up to the entrepreneur to qualify the vehicle as ready for use in the company. How to determine if a car is fit for use and can be accepted as fixed asset or not? To answer this question, it is useful to refer to the road traffic regulations. The car will be fit for use when it is admitted to road traffic. Due to the fact that the car is intended for efficient and safe movement, it can be assumed that its fitness for use in business is the condition of its admission to road traffic.
Art. 71 sec. 2 of the Road Traffic Act:
The vehicles referred to in paragraph 1. 1 are put into service, if they meet the conditions specified in Art. 66 - technical requirements of the vehicle participating in the movement - and are registered and provided with legalized registration plates (plate), and in the case of motor vehicles, excluding motorcycles, a control sticker". A motor vehicle is therefore admitted to road traffic when it complies with the technical requirements set out in Art. 66 of the Road Traffic Act, and is also registered and provided with legalized registration plates and a control sticker. The document confirming the admission to traffic of a motor vehicle is a registration certificate or a temporary permit (Article 71 (1) of the Road Traffic Act).

By purchasing a used car that is already registered and roadworthy, ownership is transferred to another person (or persons). In this case, the current owner provides the new owner with the registration certificate and the vehicle card. The change of ownership of the car does not imply that the vehicle will be withdrawn from road traffic. The new owner can therefore use the vehicle in accordance with its intended use without any problems, that is, move it - the new car is still allowed for traffic.

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Example 1.

Mr. Bartholomew bought a used vehicle at a commission shop. He has already received a car and a margin VAT invoice that documents the transaction. The car has not been re-registered, but due to the fact that the regulations allow the use of the newly acquired car without prior re-registration, Mr. Bartłomiej used it for business purposes and purchased fuel on the day of purchase. When should an entrepreneur enter the vehicle into the fixed assets register? Can it include the purchase of fuel as costs and deduct VAT?

Mr. Bartłomiej may enter the vehicle into the fixed assets register on the same day on which he made the purchase and received the VAT margin, of course, provided that the car meets all the necessary conditions for including an asset in the fixed assets register. Purchased fuel can be an expense in the business. However, one should remember about the limitations of qualifying the expenditure as tax deductible costs and VAT deduction for passenger cars used in the activity.

Vehicle registration and the impact on the entry of the vehicle in the fixed assets register - summary

A used vehicle that does not require repair is complete and roadworthy as soon as ownership is transferred to the new owner. The possible re-registration of the car is therefore irrelevant in relation to the entry of an asset into the register of fixed assets in business. The entrepreneur may therefore include the vehicle in the fixed assets register on the date of purchase, i.e. on the date of the purchase and sale agreement or receipt of the invoice documenting the purchase. The first depreciation write-off is made in the month following the month of entering the vehicle into the fixed assets register.