Sale of used cars and collector's cars from the EU and outside the EU

Service-Tax

The industry selling old cars is developing more and more on the Polish market. Many people in the country would like to become the owner of such a car. Companies purchasing this type of vehicle import cars from countries outside the EU and make intra-Community acquisitions of these cars. And here the first questions arise, namely - how should the sale of used cars be taxed on the basis of VAT?

Collectables and second-hand goods

Pursuant to Art. 120 paragraph 1 point 2, 4-6 of the VAT Act, collectors' items are understood as:

  1. postage or fiscal stamps, postage stamps, first-circulation envelopes, stamped stationery and the like, barred, and if unframed, then deemed invalid
    and not intended for use as valid means of payment (CN 9704 00 00),

  2. collections and collectors 'items of zoological, botanical, mineralogical, anatomical, historical, archaeological, palaeontological, ethnographic or numismatic value (CN 9705 00 00), as well as collectors' items referred to in art. 43 sec. 1 point 7,

  3. second-hand goods are understood as movable material goods suitable for further use in their current condition or after repair, other than those specified in points 1-3 and other than precious metals or precious stones (CN 7102, 7103, 7106, 7108, 7110, 7112 ).

In the case of a car, in order to be considered a collector's item, it must bear an expert opinion giving the symbol of a collector's item CN 9705 00 00. The car meets the criteria for declaring it a collector's item if it is a vehicle of historical or ethnographic importance, and if:

  1. is in its original condition, without any significant changes to the chassis, body, steering, brakes, drive system or suspension and engine. Repair and maintenance is allowed,

  2. its damaged or worn parts, accessories and components may be replaced, provided that the vehicle is preserved and kept in a proper historical condition,

  3. is at least 30 years old,

  4. it is in a model or type that is no longer produced.

It should be emphasized that retrofitted or modified vehicles are not allowed.

The most important factor is who the used collector car was bought from

The legislator reserves the right to sell via VAT-MARGIN, depending on who the used collector's item is purchased from. Pursuant to Art. 120 paragraph 10 of the VAT Act, the sale with the use of VAT-MARGIN applies to the supply of second-hand goods, works of art, collectors' items or antiques, which the taxpayer purchased from:

  1. a natural person, legal person or organizational unit without legal personality, which is not a taxpayer, if:

  1. the supply of these goods was exempt from VAT (objectively or subjectively),

  2. the supply of these goods was taxed in accordance with the VAT-MARGIN procedure,

  1. a legal person who is not a value added tax taxpayer,

  2. value added tax payers, if the supply of these goods was exempt from VAT (objectively or subjectively),

  3. value added tax payers, if the supply of these goods was taxed in accordance with the principle of the VAT-MARGIN procedure, and the buyer has documents clearly confirming the purchase of goods on these principles.

So, a very important issue for a company purchasing old cars is who they bought the vehicle from. If it was not entitled to deduct VAT upon purchase, it will be able to tax the sale in the country on the basis of VAT-MARGIN. So the basis for VAT taxation in this case is the difference between the sale amount and the purchase amount, less the tax amount constituting the sales margin. If, on the other hand, VAT was deducted when buying a car, then sales in the country will have to be taxed at 23% VAT.

Delivery of used and collector's cars from the European Union and from outside the European Union

Taking into account the above, the sale of cars can be considered as follows:

  1. collector cars, imported, i.e. purchased from countries outside the European Union, taxed at the purchase (customs clearance) at the rate of 8%, at the time of domestic sale, the taxpayer will be obliged to apply the standard VAT rate of 23%,

  2. cars other than collectors, imported, i.e. purchased from countries outside the European Union, taxed at purchase (customs clearance) at a rate of 23%, at the time of domestic sale, the taxpayer will be obliged to apply the standard VAT rate of 23%,

  3. Collector's cars, as well as other cars, purchased from contractors from the European Union, may be sold in Poland using the VAT-MARGIN system with a VAT rate of 23% if:

  1. these cars will be purchased from non-taxable entities from the European Union (regardless of whether they are natural persons or companies),

  2. these cars will be purchased from European Union entities that are taxpayers (regardless of whether they are natural persons or companies), when the sale of cars to the Polish taxpayer will be exempt from VAT (subjectively or objectively), or when the sale of cars was subject to VAT, the margin .

When analyzing the provisions of the VAT Act and due to the numerous doubts of companies as to the possibility of applying a preferential VAT rate to the domestic sale of collector cars imported from abroad, unfortunately it should be stated that currently in the VAT Act there are no provisions enabling an active VAT taxpayer to sell collector cars in Poland. with a rate of 8%.

The confirmation of the above is the individual tax ruling of June 7, 2017. with reference number 0111-KDIB3-3.4012.18.2017.1.PK issued by the Director of the National Tax Information.