Taxation on cars - income taxes

Interpretacja w zakresie odliczania VAT od zakupów dokonywanych za pośrednictwem kart paliwowych

On January 1st 2019 a number of important tax regulations enters into force. We would like to draw your attention to changes related to cost of company cars, because upcoming changes may have impact on your business decisions.

Limit for depreciation and insurance cost of passenger cars

The limit will be increased to 150 000 PLN from current 20 000 euro. It is not quite clear that the new limit may be applied to the vehicles that have already been adopted to use, but absence of interim provisions indicates that tax payers will have the right to do so, increasing deductible cost to 150 000 PLN. Separate limit of 225 000 PLN have been established for electric vehicles.

Limit for costs related to lease or rental agreements of passenger cars concluded after December 31st 2018

These costs will be tax deductible to the limit of 150 000 PLN. The limit will be applicable also to the agreements which stipulations have been changed after the deadline. There are doubts what changes may result in application of the limit, but certainly tax payers should avoid amendments related to the value of the vehicle, schedule and other important elements of the contract. Under the circumstances, entrepreneurs who plan to take advantage of a leasing agreement should hurry up not only to conclude it before the end of December, but also, preferably, to receive a vehicle, because potential correction of value of a leased car in the following year may effect in application of the limit.

Operation cost of passenger cars

They will be fully tax deductible only if the vehicle operation records (the same as per VAT purposes) will be kept. For other passenger cars, only 75% of operation cost will be tax deductible. The limit will be applicable both for owned and leased cars. In case of private cars of entrepreneurs used for company purposes, the limit of 20% deductible cost will replace mileage allowance.

Anna Drzyzga
MDDP Outsourcing