Purchase of a means of transport in tax costs
The use of a company car for the purposes of business activity is a common phenomenon. Increasingly, taxpayers are looking for other means of transport that provide them with easier access to the customer or guarantee greater prestige. In the text below you will find the answer whether each purchase of a means of transport can be included in the costs.
Definition of the tax cost
In accordance with the general rule, expenses that meet the following conditions jointly are considered to be tax deductible costs:
- were incurred by the taxpayer,
- are definitive (real),
- they are related to the business activity conducted by the taxpayer,
- they were incurred in order to obtain revenues, preserve or secure their source or may have a different impact on the amount of revenues obtained,
- have been properly documented,
- they are not listed in the catalog of expenses and do not constitute tax costs (Art. 16 (1) PDOP / Art. 23 (1) PDOF).
When assessing the possibility of classifying expenses incurred as tax deductible costs, the taxpayer should consider the expenses incurred with particular care in the context of their representative nature. The Supreme Administrative Court in the judgment of 17 June 2013, ref. No. II FSK 702/1, stressed that:
"The purpose of representative activities is to improve or create a positive image of the taxpayer, as well as to create a certain image of his enterprise outside, taking into account the economic reality."
At the same time, the conclusions drawn from the judgment of the Supreme Administrative Court of September 8, 2000, file ref. no. I SA / Łd 1317/98:
"The purpose of incurring expenses related to the conducted business activity is decided by the entity conducting business activity, not by the tax authority. If the expenses incurred by the taxpayer in order to obtain income have been properly documented / e.g. an agreement with a training company, training program and invoices / and recorded in the tax records kept, they are taken into account when determining the tax base as tax deductible costs ”.
Trade talks on the yacht
Owning a yacht with the company's logo is not a sufficient condition to consider that the expenses incurred by the company are of advertising nature. As indicated by the Provincial Administrative Court in Kielce in the judgment of October 26, 2017, I SA / Ke 522/17:
"The mere movement of the yacht with the company's logo, staying overnight on it and the potential possibility of conducting business talks on board, without taking other actions that could persuade future contractors to establish business contacts on the yacht (with the participation of employees staying overnight) undermines the existence of a relationship of expenses on the use of the yacht with income from the company's activities that do not consist of shipping related activities ”.
According to the court, owning a yacht is a manifestation of luxury, attractiveness and prestige, so as a rule, the expenses related to the maintenance of the yacht constitute representative expenses. At the same time, in the interpretation of the Minister of Finance of October 26, 2011, IPPB3 / 423-636 / 11-2 / PK1, it was indicated that:
"(...) marketing activities carried out by the Company consisting in organizing cruises, trips for recipients of products and customers are characterized by elegance and grandeur, and, consequently, should be qualified as representation costs not included in tax deductible costs. (...) It should also be emphasized that the activities undertaken in the field of using the yacht for meetings of recipients and customers of products are directed only to a specific category of recipients. As a result, they cannot be attributed the characteristics of advertising, which in principle can be considered a tax cost under Art. 15 sec. 1 of the PDOP Act. (...) the advertising campaign consisting in placing the entrepreneur's markings on the hull of the yacht is addressed to an unlimited number of recipients. It therefore does not contain the limitations of the essence of "representation", where the public is individually marked. '
Using a boat in the context of including the expenses incurred for its purchase as tax deductible costs is easier than in the case of a yacht. According to the judgment of the Supreme Administrative Court of April 9, 2013, file ref. II FSK 1674/11, in order to include the expense on the purchase of a motorboat in tax costs, it is necessary to demonstrate its connection with the business activity and how the motorboat can affect the company's revenues.
By bike to the customer
In a situation where a company has a contract in a town other than its seat and intends to use a bicycle as a means of transport, the costs of its purchase may constitute tax deductible costs. If the services are provided at the customer's premises, and the bicycle will be used as a means of transport, a cause-and-effect relationship will be maintained between the expenditure incurred and the revenue generated. The purchase of a bicycle with a value above PLN 10,000 will be an expense activated over time through depreciation write-offs. Confirmation of the correctness of the above considerations can be found in the individual interpretation of the tax law provisions of August 16, 2018 of the Director of the National Tax Information, ref. No. 0114-KDIP3-1.4011.320.2018.2.KS1.
A similar answer regarding the purchase of a bicycle as a corporate expense was received by a legal advisor who intended to use the bicycle as a means of transport for the purpose of traveling to clients, institutions, courts and bailiffs' offices. The attorney-at-law intended to use the bicycle in order to avoid significant communication difficulties and time-consuming commuting (individual interpretation of the Director of the Tax Chamber in Katowice of August 1, 2014, ref. IBPBI / 1 / 415-490 / 14 / ŚS). The same opinion was expressed by the Director of the Tax Chamber in Bydgoszcz in the individual interpretation of March 6, 2008, ref. No. ITPB1 / 415-802 / 08 / MM, in which we read:
"(...) the expenditure incurred for the purchase of a bicycle may be included in tax deductible costs if it is related to the conducted business activity, i.e. if the bicycle will be used for the purposes and as part of the activity. The content of the application shows that the purchased bicycle will be used by the Applicant, who is a doctor, to travel between clinics located in different parts of the city, which indicates the existence of the above connection. The mere fact of using a passenger car on the basis of a leasing contract does not exclude the possibility of including the expenses for the purchase of a bicycle as tax deductible costs. "
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Motor as a purchase of a means of transport in tax costs
Expenditure on the purchase of a motorbike is tax deductible if it meets the above-mentioned general rules. Purchase costs are tax costs, provided that the purchased vehicle is not a fixed asset. In the case of fixed assets, taxpayers may not make depreciation write-offs on fixed assets whose initial value does not exceed PLN 10,000. Expenses incurred for their purchase are then tax deductible costs in the month they are put into use.
Tax costs include not only the purchase of a motorcycle, but also insurance, protective clothing and a helmet. A favorable position in this regard was presented by the Provincial Administrative Court in Szczecin in its judgment of 20 April 2011, ref. No. I SA / Sz 60/11. At the same time, it should be emphasized that the tax authorities recognize the helmet and specialized clothing as expenses of a personal nature, and therefore should not constitute tax deductible costs in the conducted business activity.
In the conducted business activity, a quad motor vehicle may constitute a tax deductible cost. The possibility of its recognition in the amount of the purchase for the purchase of a quad bike at one time or through depreciation write-offs depends on whether the expenditure on the purchase of a quad bike is related to the conducted business activity. Consequently, it has an impact on the creation, preservation or securing of the source of income. The correctness of this position is confirmed by the individual interpretation of the Director of the Tax Chamber in Łódź of January 8, 2013, no. IPTPB1 / 415-628 / 12-2 / MAP.
Airplane / helicopter charter
Hiring or chartering out an aircraft should qualify as tax deductible. Depending on whether it is directly related to the goal of earning income or securing it.
By preserving or securing the source of income, the legislator does not recognize a situation in which the company incurred expenses for renting an aircraft in order to allow foreign guests of the office to return directly from Poland to the United States. The tax authority decided that such a cost is not directly related to the income generated, but to building the company's image in the eyes of the client. It is irrelevant that the law firm belongs to an international network of law firms, and strategic decisions for the company are made with the help of other foreign partners. The above conclusion results from the individual interpretation issued by the Director of the National Tax Information on April 5, 2017, file ref. 1462-IPPB1.4511.87.2017.1.KS.