Vehicle VAT not deducted can be a cost!
How do I record non-deducted VAT on a passenger car? Is VAT on vehicles forfeited in full? After April 1, 2014, not anymore! Half of the VAT amount can be classified as operating costs. You can read more about it in the article below.
Vehicle VAT not deducted
Pursuant to the amendment to the VAT Act of April 1, 2014, an entrepreneur may deduct only 50 percent of a vehicle that is intended to be used for mixed purposes (both business and private). the tax included in the price of a passenger car and expenses for its day-to-day operation (until July 1, 2015, except for fuel). The remaining VAT that has not been deducted may be recognized as tax deductible, provided that it relates to the taxpayer's business activity, but there are exceptions to each rule.
Vehicle VAT not deducted for value above EUR 20,000
The non-deducted VAT on the car cannot be fully counted as tax deductible costs, if the initial value of the passenger car (determined at the level of its price, increased by the costs associated with the purchase or the market value on the date of purchase of vehicles of the same type) exceeds PLN 20,000. Euro, converted into PLN according to the average exchange rate of the National Bank of Poland on the day of handing over the car for use. This means that the depreciation calculated from the value above the above-mentioned quota limit effectively prevents the taxpayer from recognizing the actual expenditure incurred for the purchase of a passenger car in the tax account.
The depreciation of the non-deductible (i.e. more than EUR 20,000) will be included in the costs only in the event of the sale of such a vehicle.
A taxpayer purchasing a passenger car with a value exceeding the equivalent of PLN 20,000 as a fixed asset euro with the intention of its further resale in the near future, should analyze the benefits of making a decision to reduce the depreciation rate to a minimum.
Such a solution will allow for the reduction of NKUP depreciation charges during the use of the vehicle in the company and, at the same time, will result in an increase in tax deductible costs in the form of unredeemed value during the sale of the vehicle for a fee.