Car in the company
The entrepreneur can in several ways calculate the cost of buying and using a car in the company.
1. Car as a firm asset
It is entered in the register of fixed assets and is a fixed asset.
The fixed asset used to use is to be valued, for example its initial value. Most often it is the purchase price.
When a trader buys a car into a company, the invoice must be the company's data. The cost of the car should be added to the cost of the purchase, fro example transport costs. In case of import, the purchase price also includes the duty and excise duty.
To make your own car for your business, you need to write a statement of carriage for business purposes only.
"I declare that on .................. .. I have transferred the ............... passenger car for business purposes. Number of car registration.........., Vintage ... .. Engine ......... .., vehicle mileage .......... Km. The starting value of the car is ......... zł, determined on the basis of VAT invoice / purchase agreement No. ............... dated ............. "
Statement with attachments:
- a photocopy of the registration certificate and
- a photocopy of the car purchase contract (if purchased from a non-business individual) or a purchase invoice (if purchased from a business person)
Should be transferred to accounting.
Car as a last resort at the expense of the company
Every month a depreciation charge is made, which affects the reduction in income tax.
Cars are most often cushioned by the linear method. According to the assumptions of this method, the fixed asset is consumed evenly over its entire life cycle. We start depreciating starting from the first month following the month in which the car was introduced to the register of fixed assets. From the list of depreciation rates, for new cars classified under KE 741, the basic annual depreciation rate is 20%, which means that the car will be depreciated for 5 years.
The used car (which has been used for a minimum of 6 months by the previous owner) can be depreciated by half for 2.5 years at a rate of 40% per annum.
There is a limit on the depreciation of the car. This is EUR 20,000, converted into PLN according to the average euro exchange rate announced by the National Bank of Poland on the day the car is put to use. So when the taxpayer bought the car for 90000 zł and the value of 20000 euros in exchange for PLN is 86152 (at the rate of 4.3076) then the cost will not be a surplus of 3848 zł. Depreciation of 20% per year should be calculated from the amount of 86152 PLN.
VAT on cars on fixed assets
Companies deduct only half of the VAT charged on the purchase of a passenger car and the cost of ownership. If the trader submits to the tax office print VAT-26 and keep records that the car is used exclusively in business can deduct the entire VAT. The requirement for records makes a lot of problems for taxpayers. Many of them resign from the full VAT deduction because they are unable to meet the documentation obligations.
Car income tax on fixed assets
The entrepreneur reduces the income tax not only by depreciation, but also by operating expenses (fuel, repairs, tire replacement, inspections and insurance). The finance minister has recently changed the old, unfavorable interpretations for entrepreneurs, confirming that the auto can be settled in full cost even when it is sometimes used for private purposes. However, changes are getting ready.
Changes in car settlements are due to enter into force on 1 June 2017.
An entrepreneur who will want to deduct all expenses on a personal car from income will have to keep a detailed record of his journeys. Those who do not prove that they use the car only for business, will cost only half the expenditure. The proposition of limiting cost-borne expenses is therefore unfavorable for entrepreneurs.
Sale of a company car fixed car
Is the revenue of the company. It is classified as "other revenue." And that means that the taxpayer will have to pay for this tax. Due to the fact that the tax is paid on income, the income can be deducted from the income. The cost in this case will be the unadjusted value of the car. If the car was depreciated at 20% per annum and was sold for example after 2 years of car use, then the taxpayer pays 3/5 of the initial value at the time of sale.
If the taxpayer sells the car fully depreciated, there is no longer the cost to deduct. During the amortization period, he used depreciation charges. Consequently, the tax will be paid on the actual selling price.
Sales of a company car must be subject to VAT. So, when selling a car, an entrepreneur issues an invoice with 23% VAT.
Car withdrawal from business for own needs
It will not be a source of income until the taxpayers wish to sell it within 6 years of withdrawing it from the business. The sale of a recalled vehicle will be accounted for as revenue from the business even if the activity is already closed.
Where a taxable person sells a private car which has been withdrawn for private use before the expiry of the six-year period, then at his disposal, the non-amortized initial value may be taxable at the time of sale.
However, the entrepreneur must pay VAT.
When the trader was entitled to a partial or full deduction of VAT, he was obliged to pay the VAT at the time of his withdrawal.
When the trader has not deducted VAT on the purchase of a vehicle, then he will not be obliged to pay VAT on the car withheld.
Donate company car
It is an unpaid service so it does not generate revenue on the donor side, for example the entrepreneur. Tax may appear on the beneficiary side. However, this will not be income tax only inheritance and donation tax.
A tax-free gift is a donation to a spouse, children, parents, stepson, sibling, stepfather and stepmother if they report a purchase of a car to the head of the tax office within 6 months. Applications do not need to be made if the value of the car including other donations received from the same person over the last 5 years does not exceed 9637 PLN or when the donation agreement is in the form of a notarial deed.
2. Car used in a private company owned by an entrepreneur
The cost of using such a car is calculated in the mileage record. For expenses related to the operation of a car (such as the purchase of auto parts, insurance, fuel) may be included in costs, it is necessary to keep driving records for business purposes.
Kilometers should be filled for each month separately. Expenditures included in tax costs limit the limit, ie the product of the rate of 0.8358 PLN per 1 km and the number of miles actually traveled.
When the amount spent on operating a car is higher than the resulting mileage, the amount of revenue earned will be the amount resulting from the vehicle mileage record and recorded in column 13 of the revenue and expense records. The difference between the size of the monthly expense statement and the mileage resulting from the mileage will be settled the following month.
3. Car purchased in operational leasing
It is not depreciated, because until the redemption is owned by the lessor. The entrepreneur under the lease agreement pays a lease installment, which is included in the form of an invoice issued and includes VAT.
When the car is also used for private purposes, you can deduct 50% VAT on each invoice.
In order to take advantage of the 100% VAT deduction, you have to be very careful to run the bus and submit the VAT-26 declaration to the Tax Office. Polish state bodies dealing with taxes has the right to check the reliability of the mileage with the vehicle counter. If the distance is not kept "up to date", the Tax Office may challenge the full 100% deduction of VAT from lease installments.
4. Car purchased under finance lease or credit
It is owned by the trader and can be depreciated. Interest is also deductible every month.
VAT is settled either in 50% of the car also used for private purposes and 100% of the car for business purposes, if it is running a taxi and is tax-deductible 26 to the tax office.