Purchase of a used car in the EU by a VAT-exempt taxpayer

Service-Tax

Every entrepreneur running a business has the right to purchase a new or used vehicle in the European Union. However, when making such a transaction, one should take into account the obligations under the VAT Act. So how to account for the purchase of a used car in the EU made by a VAT-exempt taxpayer?

Definition of a used vehicle in the VAT Act

The VAT Act does not explain the concept of a used car, but it does explain what the new means of transport are. On this basis, when defining a used car, it can be defined as a vehicle whose odometer reading indicates that it has traveled over 6,000 km or more than 6 months have passed since it was put into service.

The moment of placing into service is the day on which the vehicle:

  • was first registered for roadworthiness *, or

  • was subject to registration for the first time in order to enter road traffic *,

whichever is earlier.


* In cases where it is not possible to establish the indicated dates, the moment of release for use is considered the date on which it was issued by the manufacturer to the first buyer or was first used for demonstration purposes by the manufacturer.

 

It is important that in order to consider a car used, it is enough to exceed one of the parameters mentioned above. Thus, if the car traveled more than 6,000 km before purchase, even if less than 6 months have elapsed from the date it was put into service, it can be defined as a used car.

Accounting for the purchase of a used vehicle in the EU by a VAT-exempt taxpayer

In the case of buying used cars from the EU, for the purposes of correct tax settlement, it is important from whom the vehicle was purchased and what was the purchase value.

Foreign Seller Tax Status

Buyer's tax status

Sales document

Settlement of the transaction

Mandatory VAT declarations

active taxpayer of value added tax (also known as VAT)

VAT exempt not registered for VAT-EU purposes

invoice - general rules

General rules


or


WNT *

lack


VAT-8 *

VAT-UE *

VAT-23 *

active taxpayer of value added tax (also known as VAT)

VAT exempt not registered for VAT-EU purposes

margin VAT invoice

General rules

lack

taxpayer exempt from VAT

VAT exempt not registered for VAT-EU purposes

bill

General rules

lack

private person

VAT exempt not registered for VAT-EU purposes

sales agreement

General rules

lack

active taxpayer of value added tax (also known as VAT)

VAT exempt registered for VAT-EU purposes

invoice - general rules

WNT

VAT-8

VAT-EU

VAT-23

active taxpayer of value added tax (also known as VAT)

VAT exempt registered for VAT-EU purposes

margin VAT invoice

General rules

lack

taxpayer exempt from VAT

VAT exempt registered for VAT-EU purposes

bill

General rules

lack

private person

VAT exempt registered for VAT-EU purposes

sales agreement

General rules

lack

* when the value of the purchased vehicle exceeds PLN 50,000

Buying a used car in the EU from a non-business person

When purchasing a vehicle from an EU country from a private individual for business purposes, an entrepreneur who is a VAT taxpayer, benefiting from the exemption, settles the purchase of a used car on the basis of a sales contract concluded with the seller. The purchase value specified in the contract will be the basis for determining the initial value of the fixed asset, which will be the purchased car. It will also be the basis for calculating depreciation.

Attention!

Write-offs for the wear and tear of a passenger car in the part determined on the value of the car, in excess of the equivalent of EUR 20,000, converted into zlotys (PLN) at the average exchange rate of the National Bank of Poland on the date of commissioning the car for use (i.e. on the date of entering the fixed assets register) are not considered tax deductible costs. ).

 

In the case of a purchase in a foreign currency, the average exchange rate of the National Bank of Poland on the last business day preceding the day is used for the purposes of determining the initial value

Important!

In case of buying a used car from the EU from a private person, there will be no WNT!

Purchase of a used car in the EU on a margin VAT invoice

When buying used goods from the EU for a company, an entrepreneur may encounter a purchase documented with a VAT invoice, margin. Such a procedure is possible not only in domestic but also foreign transactions. How to recognize that the received invoice is a margin VAT invoice? Such documents contain an annotation in the form of a reference to the regulations (unfortunately, often in force in the seller's country), indicating the use of the VAT margin procedure when selling.

The purchase of a used car is settled in the EU country under the VAT procedure, the margin at the taxpayer benefiting from the VAT exemption is adequate to settle the same type of purchase from a private person under the sales contract.

Important!

In the case of buying a used car from the EU on a VAT invoice, the margin will not occur regardless of the seller's tax status or the transaction value!

 

Therefore, on the basis of the value indicated on the invoice, the initial value of the car is determined (bearing in mind that it consists not only of the purchase price of the car itself, but also: costs of transport, loading and unloading, insurance on the way, stamp duty). Then, after the car is entered in the fixed assets register, it is depreciated.

Attention!

In the case of passenger cars with more than the equivalent of EUR 20,000 converted into zlotys (PLN) according to the average exchange rate of the National Bank of Poland on the day the car is put into use (i.e. on the date of entry into the fixed assets register), depreciation write-offs are costs only up to this limit.

Purchase of a used car in the EU as a VAT taxpayer

In the event that an entrepreneur who benefits from VAT exemption in the country, purchases a car abroad on an invoice from an active VAT payer, he is obliged to control the limit of PLN 50,000. Why PLN 50,000? Because this is the result of the provisions of the VAT Act:

Art. 10 sec. 1. Intra-Community acquisition of goods referred to in Art. 9 does not occur if: (...)

2) concerns goods other than those listed in point 1, purchased by:

a) flat-rate farmers for their agricultural activities,

b) taxpayers who perform only activities other than those subject to tax and who are not entitled to reduce the amount of tax due by the amount of input tax on the purchase of goods and services,

c) taxpayers whose sale is exempt from tax pursuant to art. 113 paragraph. 1 and 9,

d) legal persons that are not taxpayers

- if the total value of the intra-Community acquisition of goods within the territory of the country did not exceed PLN 50,000 during the tax year (...)

 

What is included in the PLN 50,000 limit? The limit includes each transaction which, if not for the VAT exemption, would be treated as an intra-Community acquisition of goods, and therefore it would be, inter alia, purchase from a foreign contractor who is a value added tax payer (a foreign equivalent of our VAT):

  • commercial goods (intended for resale);

  • basic materials (intended for purposes related to the conducted business activity);

  • equipment for company purposes;

  • fixed assets.

Therefore, if the value of the car itself exceeds PLN 50,000, the buyer, being a VAT taxpayer, benefiting from the subjective exemption, is obliged to account for the transactions as intra-Community acquisition of goods. To this end, it must:

  • register on the VAT-R form (paying special attention to part C.3 of the application),

  • pay the VAT to the tax office within 14 days (taxpayers benefiting from the VAT exemption are not entitled to deduct input VAT, therefore they are obliged to pay the VAT due to the account of the office),

  • submit VAT-23 to the tax office informing about the purchase of the car as part of the intra-Community acquisition of goods (it is necessary to attach a copy of the invoice and confirmation of payment of the tax),

  • submit a VAT-8 declaration by the 25th day of the month following the purchase and

  • submit VAT-EU information (also by the 25th day of the month following the purchase)

On the other hand, when the value of the purchased used car does not exceed PLN 50,000, the entrepreneur must check other transactions he made with foreign entities from EU countries to determine whether, after adding up their values, the limit referred to in the Act will not be exceeded. If the limit is exceeded, it will be necessary to record and tax the transaction as intra-tax. If the purchase is not exceeded, the margin is posted as in the case of the VAT procedure, i.e. the initial value of the vehicle is determined on the basis of the purchase invoice and then the consumption is amortized.

Important!

From 2015, there is no obligation to submit VAT-24 forms. Additionally, the tax office no longer issues VAT-25 certificates.