There is a group of taxpayers acquiring passenger vehicles or trucks that do not meet the statutory conditions for deducting 100% of the value of VAT. However, they have the option to make a full deduction by submitting VAT-26 information to the Tax Office.
It is important that the taxpayer submit the said form on time. Failure to comply with the obligation to submit it or failure to file it on time will have its consequences regarding limitations on deductions.
The VAT-26 information is required to be submitted by all taxpayers who have purchased motor vehicles with the intention of using them exclusively for business purposes and wish to take advantage of the full 100% VAT deduction. This also applies to cars rented under a lease or rental or lending agreement. According to the VAT Act and the Traffic Act “a motor vehicle is considered to be a motor vehicle whose design allows it to run at a speed exceeding 25km/h, with a permissible total weight not exceeding 3.5 tons. The allowable gross weight is understood as the highest weight of a vehicle loaded with people and cargo allowed to travel on the road, as determined by the relevant technical conditions. This definition excludes agricultural tractors.”
Heavy-duty vehicles with a VAT-1 or VAT-2 entry in the registration certificate are excluded from the need to submit VAT-26 information. Such an entry allows full deduction of VAT and income tax. Declaration is also not required for vehicles that, by virtue of their design, have been excluded from non-business use or their use has been deemed insignificant. This category of vehicles includes:
The VAT-26 information must be submitted to the Tax Office by the 25th of the month following the month in which the first expense related to the company vehicle was incurred. However, no later than the date of submission of JPK_V7 records. The form can be submitted either online or on paper to the Tax Office with jurisdiction for VAT purposes. If the vehicle’s destination changes, it is necessary to submit an update. The taxpayer must complete and submit the form no later than before the date on which the change of use of the vehicle is made.
In order deduct the full value of VAT it is also necessary to keep mileage records and prove that the way the vehicle is used excludes its use for non-business purposes. Records must be kept for each vehicle separately from the time it begins use in the business until the date of termination. Elements that the mileage record should contain:
If the taxpayer submits the VAT-26 information untimely, the motor vehicle is considered to be used in the business on a mixed basis.
Consequently, until the information is submitted to the Tax Office, the taxpayer will be entitled to a limited VAT deduction of 50%. Thus, if a taxpayer has not filed the information on time, and has deducted VAT in full from the expenses incurred, he will be required to make an adjustment. Full deduction will only be possible from the first day of the month in which the VAT-26 was submitted, the taxpayer is not allowed to submit it retroactively.
Author: Marta Rawska, Accountant at MDDP Outsourcing.