Can an entrepreneur deduct VAT from parking fees?


Entrepreneurs using cars in their companies should be interested in the individual interpretation issued by the Director of the Tax Chamber in Warsaw regarding the deduction of VAT charged on parking spaces. What does the tax authority say about this? Check!

VAT deductions on car expenses in the light of the regulations

The provisions of the amendment to the VAT Act currently in force divide vehicles into three groups:

  1. vehicles with 100% VAT deduction without the need to prove that they are used only in business;

  2. vehicles with a 100% deduction, which, however, will require the taxpayer to bear additional hardships to prove that the car, even potentially, cannot be used for purposes other than the business;

  3. vehicles with a 50% VAT deduction where it is assumed in advance that the car may be used for purposes other than business and no additional registration or reporting obligations are imposed on the taxpayer.

Whether a given vehicle used in the company will be included in the first group is determined primarily by its technical parameters and the documents / certificates confirming these parameters. However, the categories of motor vehicles belonging to the other two groups are the same and it is the taxpayer who decides which group to assign the vehicle used in the company to.

Therefore, despite the fact that the new regulations have been in force for several months, many taxpayers still have difficulties with the proper classification of expenses in the context of the applicable VAT deduction limit (50 or 100 percent). In a situation where the entrepreneur is not sure how to proceed in a given situation, he may apply for an individual interpretation in this matter.

Deduction of VAT on parking spaces - a taxpayer's problem

The company did so and submitted an application to the Director of the Tax Chamber in Warsaw for an individual interpretation, inter alia, on the full deduction of input VAT resulting from invoices for the rental of parking spaces. The company provides factoring services, debt recovery and debt trading.

As part of its operations, it subleases office space with garage space in three cities. The rental of parking spaces is closely related to the lease agreement for the above-mentioned office premises. There is no reference in this document to indicate that a parking space is associated with a specific company vehicle.

In the request for an interpretation, the company presented the position that in the current situation it was entitled to full deduction of VAT, which was argued as follows:

“(...) both underground and above-ground parking spaces are allocated to the office space of which the Company is the Tenant. The above means that there are no specific motor vehicles that are parked at these locations. The places can be used, among others, by customers who have an appointment at the office also leave their vehicles in these parking spaces that belong to the office. "

VAT deductions from parking spaces according to the tax authority

On July 25, 2014, the Director of the Tax Chamber in Warsaw, in response to the above-mentioned request, issued an individual ruling (file reference number IPPP1 / 443-442 / 14-4 / ISZ), in which he adopted a position favorable to the entrepreneur. It found that, in the light of the applicable regulations, the company is entitled to a full deduction of the VAT contained in the invoices documenting the rental services for parking spaces, related to the contracts for the lease of office space.

In the justification of the tax authority's position, we read:

“(...) The rented parking spaces, parking spaces and garage spaces are used both by the cars belonging to the Company's Clients who have an appointment at the office and by the Applicant's company cars. The rental of these parking, parking and garage spaces is not an expense strictly and exclusively related to the vehicles belonging to the Company. Therefore, in the case of these expenses, the limitation of the right to deduct input tax referred to in Art. 86a of the Act.

Therefore, the expenses incurred for the rental of office real estate together with the associated (...) parking spaces (...) constitute general costs related to the activities conducted by the Applicant. The expenses related to the services are indirectly related to the Applicant's obtaining the turnover taxable with the value added tax.

Thus, due to the use of the incurred expenses for the rental of individual office properties along with the parking, parking and garage spaces belonging to them, the Applicant will have the full right to deduct the input tax in accordance with the provisions of art. 86 of the Act. "

Importantly, this is another positive interpretation issued on the deduction of VAT from expenses related to the operation of company vehicles in the light of the new regulations.