Rent a car and mileage

This is important news for all those who bear the burden of renting a passenger car for the purposes of their business. On November 8, the Minister of Finance issued an interpretation in which he agreed with the current line of judicial decisions regarding the recognition of rental expenses as tax costs on general terms.

Car rental - how was it?

Until now, in the opinion of the tax authorities, the value of the rent included in the costs was to be limited by the limit resulting from the vehicle mileage register. This assessment was caused by the unclear interpretation of Art. 23 sec. 1 point 46 of the PIT Act and Art. 16 sec. 1 point 51 of the CIT Act, and more precisely the meaning of the word "use".

This is because expenses incurred due to the use of a passenger car not entered into the register of fixed assets, including that owned by a person running a business, for the purposes of the taxpayer's business activity, are not considered to be tax deductible costs - in part exceeding the amount resulting from the mileage limit.

According to entrepreneurs, the rent of a car is an expense for acquiring the right to use. It is not directly related to the use itself.

Rent a car and mileage

On November 8, 2013, the Minister of Finance issued a general ruling (reference number DD2 / 033/55 / ​​MWJ / 13 / RD-111005), aimed at unifying the application of tax law. The line of jurisprudence of administrative courts, which was favorable to taxpayers, contributed to this. Expenses related to the payment of rent for a passenger car can be accounted for on general terms, and therefore recognized directly in tax costs.

As stated by the Minister of Finance: “The content of Art. 23 sec. 7 of the PIT Act and Art. 16 sec. 5 of the CIT Act, to the extent that it indicates that the vehicle mileage record should contain at least the following data: surname, first name and address of residence of the person using the vehicle, vehicle registration number and engine capacity, consecutive entry number, date and purpose of departure, route description ( where from - where to), the number of kilometers actually traveled, the rate for 1 km, the amount resulting from the multiplication of the number of kilometers actually traveled and the rate for 1 km, and the signature of the taxpayer (employer) and his data. These provisions show that the expenses related to the use of the passenger car referred to in art. 23 sec. 1 point 46 of the PIT Act and Art. 16 sec. 1 point 51 of the CIT Act relate only to expenditure on the operation of passenger cars related to the number of kilometers traveled and engine capacity. It is in relation to these data that the "rate for one kilometer" is determined. Since the sum of the limited expenses may not exceed the amount resulting from the multiplication of the number of kilometers of the actual mileage of the vehicle and the rate for one kilometer, specified in separate regulations, this type of statistical calculation cannot in any way be equated with fees that are not subject to it.

Taking into account the above, the expenses for renting a passenger car used for business purposes should be qualified as tax-deductible costs under the terms of art. 22 sec. 1 of the PIT Act and Art. 15 sec. 1 of the CIT Act. (...) "

This is very good news for taxpayers, because rent usually accounts for a large part of the expenses incurred, which has so far limited the possibility of including their full value in costs. The barrier was the limit resulting from the vehicle mileage record.

Rent directly in the costs, but from December?

The general interpretation issued by the Minister of Finance is binding, but only from November 8. As a result - it does not protect taxpayers with a retrospective date. In order to avoid possible negative verifications by tax offices, expenses for rent incurred up to the date of issuance of the general ruling should be settled within kilometers. Due to the fact that invoices for car rentals are usually issued in the first days of the month, the safest option is to skip the mileage limitation mechanism starting from December.