How to amortize a vintage car in business?
The use of cars as part of business is such a common fact that it is not worth writing about it. It should be mentioned, however, that not every entrepreneur decides to buy a new or almost new car in his company - some prefer the historic ones. Driving a vintage car is a good basis for a profitable business - but can such a car be depreciated on the same terms as other cars? Check how to depreciate a vintage car!
When and how to depreciate a vintage car?
An entrepreneur in his company classifies as tax deductible expenses incurred for the purchase of fixed assets and intangible assets in the form of depreciation write-offs. Cars are no exception here - if an entrepreneur wants to reduce the tax base by depreciation write-offs of the vehicle, he must include it in the company's fixed assets.
Art. 22a paragraph. 1 of the Personal Income Tax Act (PIT). According to it, depreciation is subject to, inter alia, means of transport owned or jointly owned by the taxpayer, acquired by him or manufactured on his own, complete and fit for use on the date of acceptance for use. Additionally, the expected useful life should be longer than one year, and the use is to be related to the conducted business activity.
Therefore, it can be assumed that the historic car will also be subject to depreciation on the standard principles. However, entrepreneurs are uncertain about the fact that a certain catalog of assets, which also includes works of art and museum exhibits, was excluded from the possibility of depreciation (Article 22c (3)). Should a historic car not fall under this exemption?
Works of art and museum exhibits
It is difficult to read directly from the regulations whether vintage cars belong to the category of works of art or museum exhibits - it is actually difficult to determine what belongs to both groups. Neither the PIT Act nor the Corporate Income Tax (CIT) Act contain definitions of both terms.
Therefore, it is worth looking for a definition in another source - e.g. in the Great Dictionary of the Polish Language, according to which a work of art should therefore be understood as a permanent scientific or artistic creation of the human mind. On the other hand, a museum exhibit is - according to the PWN dictionary of the Polish language - an object displayed for viewing in a museum or at an exhibition. Therefore, it seems logical that a vintage car, used in the activity for driving - and not for viewing - will not constitute a museum exhibit.
What about a work of art? At this point, it is worth referring to individual interpretations issued, for example, by the head of the tax chamber in Warsaw on November 21, 2008 (IPPB3 / 423-1384 / 08-2 / KB) or on September 14, 2009 (IPPB1 / 415- 520 / 09-2 / AM).According to these opinions, a car cannot constitute a work of art, as its production was carried out in series - so it does not have unique features in which the creator of the work could be expressed. In the interpretation of November 21, 2008, it was indicated in detail that “(...) the Company should agree that the brand x car from 1934 entered in the register of historic vehicles does not meet the conditions for qualifying it as a work of art or museum exhibit. This car, as a serial product, is not a unique work of any particular artistic value. This car is also not a museum exhibit entered in the inventory of museum objects. Thus, the provision of Art. 16c of paragraph 1. 3 of the Corporate Income Tax Act [Art. 22c of the PIT Act - editor's note ed.], in the present case, will not apply. Thus, the position of the Company, according to which it may make depreciation write-offs from the initial value of the above fixed asset, is correct. "
At the same time, the governor pointed out that in the case of similar cases, it is worth using common sense first of all. Therefore, if the entrepreneur uses a vintage car, e.g. in an offer for passenger transport as part of special events, it can be considered that such a vehicle is a fixed asset, subject to depreciation on the standard terms - like other fixed assets.