Limitation in AC settlement and the definition of a passenger car
Extensive changes in the national tax law had a significant impact on the methods of settling accounts for all persons running a business. It is necessary to become acquainted with the new regulations mainly for people who use all kinds of motor vehicles in the enterprise. Significant modifications included, inter alia, the definition of a passenger car included in the Personal Income Tax Act. From April 1, 2014, a completely new concept of a passenger car was introduced, different from the definition in the first quarter of this year. In some cases, this may have an impact on the limitations of the policy for voluntary vehicle insurance.
Passenger car definition changed
From 1 January 2014, the definition of a passenger car was the same both in the Income Tax Act (PIT) and in the provisions on value added tax (VAT). The reason for making the two concepts equal were the changes in the deduction of VAT on motor vehicles used in business activities.
Pursuant to Art. 5a point 19a of the PIT Act - in the wording from 1 January to 30 March 2014 - a passenger car belongs to the category of motor vehicles with a maximum permissible weight not exceeding 3.5 tons, if it is intended for the transport of no more than 9 people, including the driver. However, the legislator provided for certain exceptions from the above, in the case of:
- a motor vehicle classified according to the provisions of the road traffic law as a multi-purpose vehicle, a van - with one row of seats separated from the loading area by a fixed wall or partition,
- a motor vehicle with more than one row of seats separated from the part intended for the carriage of goods by a wall or a permanent partition, and its length exceeds 50% of the length of the vehicle,
- a motor vehicle with an open part for transporting loads,
- a motor vehicle with a structurally separated cabin from the body intended for the transport of loads,
- a special vehicle within the meaning of the road traffic law,
- other motor vehicle than those mentioned above, the number of seats, including the driver's seat, is:
- 1 - if its maximum load capacity is equal to or greater than 425 kg,
- 2 - if its permissible load capacity is equal to or greater than 493 kg,
- 3 or more - if its maximum load capacity is equal to or greater than 500 kg.
Importantly, the cars listed in points 1-4, in order to be considered as non-passenger vehicles, their technical condition had to be confirmed by a certificate issued by the district vehicle inspection station and an appropriate annotation in the registration certificate. In the case of vehicles for which the minimum permissible load capacity was established (in point 6), compliance with the technical requirements had to be confirmed by documents issued in accordance with the provisions of the road traffic law. Otherwise, they should also be considered passenger cars.
Another change in the regulations resulted in a slightly broader definition of a passenger car. Pursuant to Art. 5a point 19a - in the version from 1 April 2014 - it is a motor vehicle within the meaning of the road traffic law with a maximum permissible weight not exceeding 3.5 tons, which is intended for the transport of no more than 9 people, including the driver. However, motor vehicles are an exception if:
- they have one row of seats, separated from the part intended for the carriage of loads by a wall or a permanent partition - classified as multi-purpose, a van or with an open part intended for the carriage of loads,
- they have a driver's cabin with one row of seats and a body designed for transporting loads - as structurally separate elements,
- they belong to the category of special vehicles, which results from the documents issued in accordance with the provisions of the road traffic law and meet the conditions imposed by other regulations, specified for the following purposes:
- electric / welding aggregate,
- for drilling work,
- excavator, backhoe-bulldozer,
- a hoist for maintenance and assembly works,
- truck crane,
- have been specified in the regulations issued under Art. 86a paragraph 16 of the Value Added Tax Act.
Art. 86a sec. 16 of the VAT Act
The proper Minister of public financies may determine, by regulation, other than those referred to in paragraph 1. 9 motor vehicles, referred to in paragraph. 4 point 2, considered to be used only for the taxpayer's business, the requirements for these motor vehicles and documents confirming the fulfillment of the requirements, taking into account the specificity of their design and their application, and in the case of vehicles with more than one row of seats - also the requirement that the permissible total weight is greater than 3 tons.
For the cars specified in point four, the new Regulation of the Minister of Finance of March 27, 2014 applies from April 1, 2014.on motor vehicles considered to be used exclusively for the taxpayer's business activity. Pursuant to § 2, the catalog of vehicles considered to be used exclusively in business activity has been extended to include the following vehicles:
- bank cars, but only of type A and B
- if they have one row of seats or their permissible total weight is greater than 3 tonnes.
In addition, the vehicles mentioned above should meet the conditions set out in § 3 of the above-mentioned regulation.
The technical condition of the motor vehicles listed in points 1-2 should be confirmed by a certificate issued by the district vehicle inspection station and an appropriate note in the registration certificate. With regard to the vehicles specified in point 3 - compliance with the technical requirements should be confirmed by documents issued in accordance with the provisions of the road traffic law.
Change of the definition of a passenger car and AC insurance
Unfortunately, the changes in the regulations regarding the definition of passenger cars also had an impact on the limitations in the settlement of premiums for voluntary vehicle insurance - auto casco (AC). Vehicles that were considered non-passenger before April 1 are no longer so, for example: motor vehicles with a certain number of seats and a permissible load capacity listed in the definition before April 1 in point six.
The limitation in settling AC insurance premiums applies to passenger cars. Pursuant to Art. 23 sec. 1 point 47, premiums for car insurance in the amount exceeding their part determined in the proportion equal to the equivalent of EUR 20,000 - in the value of the car assumed for insurance purposes may not be a tax deductible cost of revenue. The conversion should be made according to the selling rate of foreign currencies announced by the National Bank of Poland on the date of conclusion of the insurance contract.
Many taxpayers use vehicles in their business which, after the changes from April 1, do not meet certain requirements allowing them to be considered non-passenger vehicles. So, should they be considered personal from now on, if they were not previously so? Not completely.
Please refer to the provisions of the Act amending the Act on tax on goods and services and some other acts, namely Art. 14 sec. According to that provision, the new definition of passenger cars applies to:
- acquired or manufactured by the taxpayer from the date of entry into force of this Act,
- used on the basis of a rental, tenancy, leasing or other similar agreement concluded from the date of entry into force of this Act.
Due to the above, the change of the definition does not affect motor vehicles other than passenger cars, which the taxpayer purchased or produced before the entry into force of the amendment discussed.