VAT-26 – how to report a company car and deduct 100% of VAT?
How can you effectively report a vehicle using the VAT-26 form and secure full VAT deduction on the costs of its use? What conditions must be met and within what deadlines? Which expenses can be deducted? Below you will find detailed information.
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The VAT-26 notification is a document that must be submitted by entrepreneurs who use a passenger car exclusively for business purposes and wish to deduct VAT at the rate of 100%. In such a case, VAT may be deducted on all costs related to the acquisition of the vehicle, as well as on all operating expenses, such as fuel, servicing and repair costs, leasing, insurance, and other operating costs.
The notification is submitted to the competent tax office, i.e. in the case of a company – to the tax office competent for the place of the company’s registration, and in the case of a sole proprietorship – to the tax office competent for the taxpayer’s place of residence.
The VAT-26 form may be submitted electronically or in person at the tax office.
Conditions for full VAT deduction on a company car
If the car is used exclusively for business purposes and, additionally, a detailed vehicle mileage record (the so-called mileage log) is kept, the entrepreneur is entitled to deduct 100% of VAT. It should be remembered that the records must comply with the regulations and include, among other things, the purpose of the trip, the route, and the exact number of kilometers, in order to avoid problems during a tax audit.
Deadlines and formal requirements related to VAT-26
The law strictly defines the deadline for submitting the VAT-26 form. The notification must be filed no later than the 25th day of the month following the month in which the entrepreneur incurred the first expense related to the vehicle, but no later than the date of submitting the JPK_V7 file for the previous month.
Example: if the first expense was incurred on October 5, the VAT-26 notification must be submitted by November 25. However, if the JPK_V7 file is sent before November 25, the VAT-26 form must be submitted on the same day.
Consequences of failing to submit or delaying the submission of VAT-26
If the VAT-26 notification is not submitted within the statutory deadline, the taxpayer irreversibly loses the right to deduct 100% of VAT on expenses incurred in the first month of using the vehicle. In such a case, only 50% of VAT may be deducted. This also applies to the purchase of the vehicle.
Example: if the first expense was incurred on October 5 and the VAT-26 notification was not submitted by November 25, the taxpayer may deduct only 50% of VAT on expenses incurred in October. If the VAT-26 form is submitted by December 27 (or together with the submission of the JPK_V7 file for November 2024), then 100% of VAT may be deducted on expenses incurred in November.
When is it not necessary to submit VAT-26?
Submitting the VAT-26 notification is not required in two cases:
- If the entrepreneur intends to use the car exclusively for private purposes (in such a case, VAT deduction is not available at all),
- If the car is used in a mixed manner (i.e. both privately and for business purposes) – in this case, only 50% of VAT may be deducted.
It is worth noting that for certain special-purpose or heavy goods vehicles, submitting the VAT-26 form may not be required, provided they meet specific statutory criteria.
Can the tax office require additional documents when submitting VAT-26?
After submitting the VAT-26 form, the tax office may request additional documents confirming the status and use of the vehicle. Examples of required documents include:
- The purchase invoice for the vehicle,
- A leasing agreement,
- A rental agreement,
- Another document confirming that the vehicle is used exclusively for business purposes.
Submitting the VAT-26 notification is a key element for entrepreneurs wishing to deduct 100% of VAT on vehicle-related expenses. Timely submission of the notification and proper maintenance of vehicle mileage records are of crucial importance. Failure to comply with these rules may result in limiting the VAT deduction to 50% and additional complications during a tax audit.
Author:
Liliana Szala, VAT Specialist, MDDP Outsourcing – Katowice
