The registration fee and the initial value of the car


The taxpayer, when purchasing a vehicle for the company - regardless of whether it is a new or used car - must take into account the necessity to pay the registration fee. The question arises: should the registration fee be included in the initial value of the fixed asset? Or maybe there are dependencies that condition its inclusion in the initial value? You will find the answers to these questions in this article.

Registration fee - what is it?

The registration fee is a series of expenses that a person owning a car must incur in order to use it in accordance with applicable law. It consists of:

  • fee for issuing a new registration certificate,
  • legalization marks,
  • control sticker,
  • temporary permit,
  • registration fee,
  • the cost of purchasing new license plates,
  • recycling fee (in the case of cars imported from abroad).

Registration fee and tax deductible costs

Tax deductible costs are expenses that the taxpayer incurs in order to achieve or maintain revenues or secure their source - with the exception of the costs referred to in article 1. 23 of the Personal Income Tax Act (hereinafter: the Personal Income Tax Act). It follows that the registration fees for a car purchased for the purpose of using it for business purposes fall within the concept of tax costs.

The provisions of the Act on the Personal Income Tax specify that a fixed asset may be any asset that is owned or jointly owned by the taxpayer (e.g. acquired for a fee), which is also complete and fit for use on the date of acceptance for use, and its useful life should exceed one year. Additionally, it should be used for the purposes of conducted business activity. If all of the above-mentioned criteria are met, then such an asset should be entered into the register of fixed assets.

It was assumed that the car may be used in business activity, provided that it has been registered, in other words - it is allowed for traffic. In addition, the provisions of the Road Traffic Law allow the new owner to use the vehicle, despite the fact that it is still registered on the previous one. Therefore, it is recognized that the taxpayer has the right to enter such a vehicle into the fixed assets register, even if it has not yet been registered. The basic condition for this is the efficiency of the car.

The registration fee and the initial value of the car

If the taxpayer decides to enter the purchased vehicle into the fixed assets register, although he has not yet registered it, the re-registration fees should be included directly in the tax deductible costs. He cannot increase the initial value of the fixed asset by them. The initial value of the fixed assets purchased is the purchase price, i.e. the price to be paid to the seller increased by the costs related to the purchase that the taxpayer has incurred until the fixed asset is put into use. Therefore, if the taxpayer decides to use the purchased vehicle in business before its re-registration, the charges will be the tax cost on the date of payment.

If, on the other hand, the taxpayer registers the vehicle on himself before including it in the fixed assets register, the registration fees will increase the initial value of the purchased car and will be reflected in the costs in the form of depreciation write-offs.