Deduction of VAT on fuel after July 1 - what does the Ministry of Finance say?


From July 1, 2015, in accordance with the provisions of the Act of February 7, 2014, active VAT payers gained the right to 50%. VAT deduction on fuel purchased for mixed use passenger cars used in business activities. The Ministry of Finance has therefore published explanations. What to pay attention to with such activities as VAT deduction on fuel after July 1, 2015?

The right to deduct 50% VAT on fuel

Only until June 30, 2015, in accordance with the provisions of the Act amending the Value Added Tax Act and some other acts (Article 12), taxpayers using passenger cars for the so-called mixed purposes did not have the right to deduct VAT on fuel. As a consequence, the gross value of the purchased fuel was classified as tax deductible in the case of a car used in the company but not reported to the office. On the other hand, from 1 July, in accordance with the applicable general rules resulting from the VAT Act (Article 86a (1)), in the case of purchasing fuel for cars used both in business and privately, you are entitled to a 50% VAT deduction.

Watch out for the dates on your fuel invoice!

The regulations say directly that the inability to deduct VAT on the purchased fuel will apply to motor fuels, diesel oil and gas used for propulsion, purchased by the taxpayer until June 30, 2015. Hence, this provision cannot be interpreted freely, but only by reading him outright. Thus, an invoice for fuel issued, for example, on July 10, with the date of sale in June, will not allow VAT to be deducted. The same applies to duplicate invoices prior to June 30. The Ministry of Finance also warns against making mistakes in the announcement published on its website:

As a rule, the right to deduct should be assessed in the light of the regulations in force at the time when the tax obligation of the fuel seller arises. Therefore, if the fuel was purchased by June 30, 2015, then regardless of the fact that the invoice was issued, for example on July 4, 2015, the right to deduct the tax in the discussed case will not apply. The tax obligation with the seller for the described activity arose before July 1, 2015, so the right to deduct should also be assessed according to the legal status in force before July 1, 2015. The moment of issuing the invoice does not matter for determining the right to deduct, receiving the invoice only has importance for the moment when the right to deduct is exercised.

Therefore, entrepreneurs using fuel cards who received a collective invoice for June in July should be especially careful. Although, in principle, the right to add VAT is due in the month of receipt of the invoice, it will be a special case that does not allow for a deduction (the actual purchase of fuel took place before July 1).

Deduction of VAT on fuel after July 1 - additional announcement from the Ministry of Finance

On the occasion of explanations regarding the deduction of 50% VAT on fuel after July 1, 2015, the Ministry of Finance reminded taxpayers that:

(...) - as in the case of other expenses related to motor vehicles - the condition for deducting input tax on the purchase of fuel is the compliance of the purchase with the actual state, i.e. in principle the amount of fuel purchased should be reflected in the mileage of the "company" vehicle.

At the end of the message, we read:

The issue of the actual use of fuel for propulsion of "company" vehicles, especially those purchased after 1 July 2015, will be the subject of inspections carried out by competent authorities.

So should taxpayers be afraid? No - they should only remember about the rational and factually correct recording of purchases related to running a business, in particular regarding the operation of vehicles used in it.