Settlement of passenger car fuel costs in the company
The method of settling the costs related to a passenger car in the company depends on the method of its use, because the vehicle may be settled after its entry into the register of fixed assets, or the taxpayer may use a private car for the company's needs, as well as the vehicle may be purchased on the basis of a rental agreement. or leasing. In each of these cases, the settlement of fuel costs for a passenger car may differ slightly in terms of income tax and VAT. Let's check how to correctly account for fuel expenses in company costs.
VAT deduction on expenses related to the use of a passenger car
In a situation where the company uses a passenger car, special attention should be paid to the provisions regarding the deduction of VAT both on its purchase and on operating expenses.
100% VAT deduction on expenses incurred on a passenger car
An entrepreneur who is an active VAT payer has the right to fully deduct VAT on the purchase of a passenger car and expenses related to its use, provided that the car will be used only for business purposes. This use must be properly confirmed, which results from the provisions of the VAT Act. In such a situation, the taxpayer must:
- report the use of a passenger car to the tax office on the VAT-26 form,
- run a mileage test for VAT purposes,
- introduce the rules of using the car in the company.
50% VAT deduction on expenses incurred on a passenger car
However, in a situation where the entrepreneur wants to avoid unnecessary paperwork (as mentioned above) or anticipates the probability of private use, he should opt for a 50% VAT deduction. Then, this method of deduction does not have to be reported to the office in any way and, importantly, does not have to keep any additional records. In such a situation, the taxpayer may deduct 50%, and qualify 75% of the net value from the invoice plus 50% of the non-deducted VAT as costs.
Settlement of fuel costs of a passenger car being a company's fixed asset
In a situation where a passenger car:
- is owned or jointly owned by the taxpayer,
- it is complete and serviceable,
- it will be used for the purposes related to its business activity or put into use on the basis of a rental or lease agreement, or a leasing agreement,
- with an expected useful life of more than 1 year,
- with an initial value exceeding PLN 10,000,
- it should be classified as a company's fixed asset, entering it in the fixed assets register and depreciating it over time.
Then, the settlement of fuel costs and other operating expenses of a passenger car used both privately and for business purposes is included in the column 13 of the KPiR in 75% of their value.
This value results from Art. 23 sec. 1 point 46a of the PIT Act, which indicates that "25% of the expenses incurred, subject to point 36, for the costs of using a passenger car, other than that specified in point 46, for the purposes of the taxpayer's business activity are not considered to be tax deductible costs - if the passenger car is also used for purposes unrelated to business activity carried out by the taxpayer. "
In order to be able to deduct 100% of costs from expenses related to a car that is a fixed asset in the company, the entrepreneur should exclude private use of the car and keep detailed records of the vehicle - one for VAT and income tax.
Leasing and settlement of passenger car fuel costs in the company
In the case of leased passenger cars, the settlement of fuel costs takes place directly in tax deductible costs in 75% of their value if the vehicle is used both for the company and for private purposes.
In the case of a company vehicle, it is possible to include 100% of the operating expenses in the costs, provided that the car is used only for the purposes of the conducted business activity. In addition, active VAT payers are obliged to keep mileage records for VAT purposes and to report the vehicle to the office on the VAT-26 form.
A detailed discussion of changes in the settlement of the costs of leased passenger cars can be found in the article: Passenger car leasing - a compendium of knowledge
Start a free 30-day trial period with no strings attached!
Settlement of fuel costs of a private passenger car in business activities
According to Art. 23 sec. 1 point 46 of the PIT Act "shall not be considered as tax deductible expenses incurred in respect of the costs of use, being the property of the taxpayer running a business, a passenger car that is not an asset referred to in article 2. 14 sec. 2, paragraph 1, and insurance premiums for such a car; however, these 20% of these expenses and contributions are tax deductible, provided that the car is also used for the purposes of the taxpayer's business. "
The amendment to the PIT Act from 01/01/2019 lifted taxpayers using a private passenger car in their business activities from the obligation to keep records of vehicle mileage for income tax purposes. From that date, the settlement of fuel costs of the entrepreneur's private passenger car is possible in the amount of 20% of the value of the expenditure, regardless of the number of kilometers traveled as part of the activity.
Expenses related to the operation (fuel, inspections, insurance or car parts) of a private vehicle will be included in the costs in the amount of 20% of the expenses incurred, which is discussed in detail in the article: Liquidation of mileage for private cars.
Settlement of passenger car fuel costs in the wfirma.pl system
The wfirma.pl system enables the correct settlement of passenger car fuel costs in the company, both in the case of cars:
- fixed assets,
- used on the basis of a leasing contract,
- private cars also used for the company's needs.
Information on how to correctly enter a vehicle into the system, depending on how it is used, can be found in the article: Adding a vehicle to the system.
The invoice for the purchase of fuel is posted in the wfirma.pl system via the tab: EXPENDITURE »ACCOUNTING» ADD »VAT INVOICE / INVOICE (without VAT), where the type of expenditure should be marked as PURCHASE OF FUEL FOR THE VEHICLE. Importantly, the expenditure should be assigned to the appropriate vehicle, then the system will automatically make the appropriate posting, both on the basis of PIT and VAT, in accordance with the applicable limits.