When selling a car, you must use the VAT correction system

April 1, 2014 was extremely important because from that date, the car regulations were completely changed and are in force both in 2015 and in 2016. In addition to the modifications to the provisions on the right to deduct VAT, a new system of corrections has been introduced, which must be made at the moment of changing the intended use of a motor vehicle, including in the case of sale. Importantly, the issue of the VAT correction system for cars has been regulated in Art. 90b of the Value Added Tax Act.

Cars used only for business purposes (with full VAT deduction) - VAT correction system

If, within 60 months, counting from the month in which the vehicle was properly acquired, imported or put into service (from which the taxpayer fully deducts VAT), there is a change in its use for business and private purposes, the taxpayer is obliged to adjustments to the amount of input tax deducted on the purchase, import or manufacture of this vehicle. The period of 60 months applies to motor vehicles with the initial value exceeding the equivalent of PLN 15,000. In the case of motor vehicles with an initial value not exceeding PLN 15,000, the correction period is only 12 months.

Cars with the right to a partial (50%) VAT deduction - a system of VAT corrections

If, within 60 months, counting from the month in which a motor vehicle was purchased, imported or put into service, where the taxpayer made a partial (50%) deduction of VAT on the purchase and operating expenses, its current use will be changed from mixed to mixed use. for business use only, the taxpayer is entitled to correct the amount of input tax deducted upon the purchase, import or manufacture of this vehicle.

In the case of motor vehicles with an initial value not exceeding PLN 15,000, the correction period is 12 months.

Important! If the car was used for mixed purposes (company and private) before the change of destination, and after the change only for business purposes, then the taxpayer is entitled to a (increasing) VAT correction. This right may or may not be exercised - the decision in this matter belongs to the taxpayer himself. However, in the opposite situation, when the car was used only for company purposes before the changes, and for mixed purposes after the changes, then the taxpayer is obliged to correct the input (reducing) VAT.

Cars used in mixed activities (taxed and exempt from VAT)

A taxpayer selling a car used for both taxable and exempt activities, when determining the correction, should take into account the VAT correction in a proportionate manner, in accordance with the regulations contained in Art. 90 of the VAT Act.