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Company car depreciation
Car settlement in the company is an important aspect of running a business in Poland. Legal and accounting regulations govern the principles of including vehicle-related expenses in the costs of obtaining revenues and deducting VAT. Below we present the most important information on this topic.
If an entrepreneur decides to include a passenger car among the company assets as a fixed asset, the following issues must be taken into account:
Operating expenses
Costs associated with using a company car, such as fuel, repairs, servicing or purchase of spare parts, may be included in tax-deductible costs.
VAT deduction
- Mixed use: If the car is used both for business and private purposes, the entrepreneur is entitled to deduct 50% VAT from vehicle-related expenses, such as purchase, fuel or service.
- Business use only: To deduct 100% VAT, certain conditions must be met, including registering the vehicle with the tax office on the VAT-26 form, keeping a record of the vehicle's mileage and introducing regulations for using the vehicle in the company.
In case of Leasing operational or rental of a passenger car:
- Lease fees: If the value of the car does not exceed PLN 150,000, Leasing fees can be included in the costs of obtaining income in their entirety. For vehicles of higher value, these costs are limited proportionally.
- Operating costs: Similarly to your own vehicles, in the case of mixed use you can include operating expenses in the 75% costs.
Private car used for business purposes
If an entrepreneur uses a private car for business purposes:
Operating costs: You can include operating expenses incurred and insurance premiums paid in the costs of obtaining income 20%.
Documentation and records
Correct accounting for a company car requires keeping appropriate documentation:
- Vehicle mileage records: Mandatory when deducting 100% VAT; must include, among others, date, purpose of trip, number of kilometres travelled.
- Invoices and receipts: Documenting expenses incurred related to the operation of the vehicle.
Company car depreciation
Settling a car in a company requires knowledge of current tax and accounting regulations. It is crucial to determine how the vehicle is used (exclusively for business or mixed) and its value, which affects the possibility of including expenses in the costs of obtaining income and deducting VAT. Regular monitoring of changes in regulations and consultation with a tax advisor can help in optimal and lawful settlement of a car in business activities.
Sources:
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Entrepreneur's Guide - Car in the company
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Entrepreneur's Guide - New rules for car settlement from 2019
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