Kilometer for PIT purposes and mileage for VAT purposes - differences


Entrepreneurs who use private passenger cars in their business, know well the issues related to the registration of vehicle mileage, the so-called kilometers for PIT purposes. Vehicle mileage records must also be kept by entrepreneurs who have passenger vehicles in their company, for which they apply a 100% VAT deduction. The condition for the deduction of 100% VAT on expenses incurred related to the vehicle will be the assumption of the so-called mileage marks for VAT purposes. Check what is the difference between the mileage allowance for PIT and VAT purposes!

A kilometer for PIT purposes for private cars

Vehicle mileage records - or mileage for PIT purposes, is associated by taxpayers primarily with private cars used for business purposes. The basic function of mileage is to calculate how many of the "car" expenses actually incurred in a given month can be classified as tax deductible costs, based on the mileage limit. The kilometer is therefore used to correctly determine the tax base in the context of personal income tax (PIT).

Doubts may be raised by the question: what should be in the mileage mark for PIT purposes? Pursuant to the provision contained in Art. 23 sec. 7 of the PIT Act, the entrepreneur should include at least the following information in his vehicle mileage records:

  • name, surname and address of the person using the vehicle,
  • Vehicle registration number,
  • consecutive number of the entry,
  • engine capacity,
  • date and purpose of departure,
  • description of the route - from the place where the journey begins to its end,
  • the rate for 1 kilometer of mileage,
  • the number of kilometers actually traveled,
  • the amount resulting from the multiplication of the rate for 1 km of mileage and the number of kilometers actually traveled,
  • signature and details of the taxpayer or employer.

Kilometer for PIT purposes introduces a limitation in including actually incurred expenses as costs, but it is not a permanent percentage restriction. This issue depends on the number of kilometers traveled for business purposes that the entrepreneur has traveled in his private car in a given month.

On the other hand, in the case of VAT on expenses incurred for the purchase of fuel and other operating costs for private cars, entrepreneurs can deduct 50% of the tax value.

Kilometer for VAT purposes and the right to deduct VAT

Entrepreneurs who have motor vehicles in the company, which constitute their fixed assets, may also keep a vehicle mileage record, however, it has a different meaning than mileage records for PIT purposes. The reason is the possibility of settling the tax on goods and services (VAT), incurred when purchasing cars and additional expenses in the form of fuel, parts, repairs, etc. Entrepreneurs may therefore decide to deduct the entire value, i.e. 100% VAT on these purchases, or use 50% deduction.

The kilometer for VAT purposes refers to situations where entrepreneurs decide to deduct 100% of VAT on vehicle expenses. In accordance with the applicable regulations, such a possibility arises when the vehicle is used only for business purposes, the VAT-26 information has been submitted to the tax office, the regulations for the use of the vehicle in the company have been created and the mileage mileage is kept for VAT purposes.

The kilometer distance for VAT purposes should contain the elements specified in Art. 86a paragraph 7 of the VAT Act, namely:

  • start and end date of keeping records,
  • motor vehicle registration number,
  • the status of the mileage odometer of the motor vehicle on the day of starting the record keeping, on the day of ending the keeping of the records and at the end of each settlement period,
  • the number of kilometers traveled as at the end of record keeping and at the end of each accounting period,
  • entry of the person driving the motor vehicle regarding each use of this vehicle, including the route description (from where-to-where), the sequence number of the entry, date and purpose of departure, name and surname of the person driving the vehicle and the number of kilometers traveled, confirmed by the taxpayer at the end of each accounting period in the scope of the authenticity of the entry of the person driving the vehicle, if it is not a taxpayer.

It should be emphasized that in the case of this record, the value of expenses, which constitute tax deductible costs, is in no way limited - when a car is a fixed asset, these costs may be fully deducted from the tax base.

The mileage for VAT purposes of a passenger car as a fixed asset is not obligatory. In the absence of it, the aforementioned restriction arises - instead of deducting 100% VAT on fuel purchases and other operating expenses, the taxpayer has the right to deduct only 50% of the tax on costs related to the use of the car. The car entered into the company's fixed assets should not be used for private purposes, regardless of the choice of the method of VAT settlement. The resignation from the mileage allowance for VAT purposes is given to entrepreneurs in order to reduce the formal burdens.

Kilometer for PIT and VAT purposes - how to generate in the system

To print kilometers for PIT and VAT purposes in the system, go to the EXPENSES »KILOMETER tab - select the appropriate entry from the list and select the PRINT» RECORD (KPIR) or RECORDS (VAT) option from the top menu bar.

More information on keeping records of vehicle mileage in the system can be found in the following articles:

  • KPiR kilometer - how to lead in the system?
  • VAT kilometer - how to lead in the system?