Taxation of the sale of a passenger car used in the company
There are many forms of using vehicles in an activity. One of them is qualifying the car to the company's fixed assets. Many doubts are raised by the sale of a vehicle constituting a company fixed asset, where it was used in a mixed manner and the entrepreneur was entitled to a 50% VAT deduction. Check what the taxation of the sale of a passenger car used in the business looks like!
Private car used in business
Expenses related to the use of a private passenger car for the purposes of business activity can be classified as tax deductible costs. The legislator noted, however, that in this case the cost limit is the amount resulting from the multiplication of the number of kilometers of the actual mileage of the vehicle and the rate for 1 km, specified in separate regulations issued by the competent minister.
Depending on the type of vehicle and its capacity, different rates apply, which are listed in § 2.1. Regulation of the Minister of Infrastructure of 25 March 2002 on the conditions for determining and reimbursing the costs of using passenger cars, motorbikes and mopeds not owned by the employer for business purposes.
For 2017, the following values are adopted:
In order to determine the actual mileage of the car, the taxpayer is obliged to keep records of the mileage of the vehicle, i.e. kilometers.
A car as a company's fixed asset
The entrepreneur may transfer to the company's property or purchase a car for the company's needs, which will constitute a fixed asset.
When classifying an asset, it should be verified whether it meets the statutory definition of a fixed asset, i.e .:
- is owned or jointly owned by the taxpayer,
- was purchased or manufactured on its own,
- it is complete and ready for use on the day it is accepted for use
- with an expected useful life of over 1 year
- it will be used for business purposes or put into use on the basis of a rental, lease or leasing agreement.
In such a situation, the value of the vehicle constituting the company's fixed asset is included in the costs of depreciation, and the asset itself is shown in the fixed assets register.
Taxation of sales of a passenger car
Sale of a private car used in the business
Revenue from the sale of a private car used in the business and accounted for on a mileage basis is not business revenue.Confirmation of this position can be found in the individual ruling with the reference number IPTPB1 / 4511-116 / 15-4 / SJ, issued by the Director of the Tax Chamber in Łódź on June 2, 2015, in which we read:
“(...) Therefore, referring to the future event described in the application, it should be stated that since the passenger car, used by the Applicant for the purposes of its business activity, was not included in the register of fixed assets and intangible assets, its sale against payment it will generate income from non-agricultural economic activity (Article 10 (1) (3) of the Personal Income Tax Act). The sale of the passenger car in question should be classified as a source of income from the sale of other things against payment, as defined in Art. 10 sec. 1 point 8 lit. d) of the act referred to. (...) "
The entrepreneur used a private vehicle in his business and settled the costs related to its use as part of the business on the basis of mileage. The trader purchased a new vehicle and the old one was sold. On the part of the taxpayer, the question arose whether, in connection with the sale of a private vehicle that was used in the business, the sale of the vehicle should be taxed as part of the business?
No, the sale of a private vehicle that was used as part of the business and settled on the mileage basis for PIT purposes, does not require reporting and taxation as part of the business.
It should be remembered that the sale of private property within six months from the date of purchase results in the creation of private income.
The car is entered in the fixed assets register
In the case of selling a car that is a fixed asset in our business, we must take into account income tax and VAT settlements, if the seller is an active VAT payer.
Tax regulations do not provide for income tax exemptions when selling a car that is a company's fixed asset. Income is absolutely taxable. However, it is very important whether the car was fully depreciated or not. If the car has not been fully depreciated, the undepreciated portion of the car's value will be deductible for tax purposes.
Art. 24 sec. 2 point 1 of the PDOF Act:
Income from disposal of assets (...) used for business purposes (...) is income from disposal of assets for consideration (...), and in other cases, income or loss is the difference between income from disposal for consideration and:
If the sale is made by a VAT taxpayer, and the sold asset is related to the taxable activity conducted, the sale should be documented with a VAT invoice. Sales of new cars are taxed at 23%.
Mr. Janusz runs a business and is an active VAT taxpayer, he sold a vehicle that was a fixed asset of the company. On the part of Mr. Janusz, there was a question whether such sales should be shown as part of the conducted activity.
The sale of the company's fixed asset should be shown and taxed as part of business activity, both on the basis of income tax and VAT. The sale of a vehicle that is a company's fixed asset must be taxed at 23% VAT.
Depending on the type of business and the method of deducting VAT when selling a company vehicle, it may be necessary to correct the deducted VAT. More on this in the article: When selling a car, you must use the VAT correction system.
Sale of a car that is a fixed asset in the online accounting system - wFirma.pl
The invoice documenting the sale of a fixed asset in the system is prepared in the tab: RECORDS »ASSET» FIXED ASSETS FILE, where you should select the fixed asset you want to sell and select SALE from the top menu.
Complete the required data in the generated window.
At the time of sale of a fixed asset, its non-depreciated part becomes a tax expense. The system automatically calculates and posts the non-depreciated part of the fixed asset to costs on the invoice issuance date.