Establishing the initial value of a company passenger car
In most companies or enterprises, passenger cars are the basis for efficient operation and development. Therefore, some companies decide to buy such cars. Regardless of whether a passenger car is used or not, it is generally classified as an enterprise's fixed assets. However, here a lot of questions usually arise. Determining the initial value is a big problem for entrepreneurs. What exactly is the initial value of the vehicle? Can the purchase of third party liability insurance or the costs of re-registering a car be included in it? The article presents the most important aspects.
Initial value of the passenger car
In the beginning, it is best to explain how the starting value is determined and what is in it. This is regulated by the Personal Income Tax Act. In the case of purchase, the initial value of a fixed asset is: the price due to the seller, increased by any purchase costs, such as transport, assembly or insurance on the way. Thus, the legislator understands the purchase price as the initial value.
Art. 22g sec. 3 of the CIT Act and Art. 16 g of paragraph 1. 3 of the CIT Act
The purchase price is the amount due to the vendor, increased by the costs related to the purchase accrued until the date of transferring the fixed asset or intangible asset for use, in particular the costs of transport, loading and unloading, insurance during the way, assembly, installation and start-up of programs, and computer systems, notary fees, fiscal and other fees, interest, commissions, and reduced by value added tax, except for cases where, in accordance with separate provisions, tax on goods and services does not constitute input tax or the taxpayer is not entitled to reduce the amount of tax due by input tax or refund of the tax difference within the meaning of the Value Added Tax Act. In the case of import, the purchase price includes customs duty and excise duty on the import of assets.
Therefore, if the entrepreneur, for example, purchased third party liability insurance for the car, the initial value of the car will not increase. This is because TPL does not affect the completeness of the vehicle, its roadworthiness, etc. Nevertheless, such an expense can be successfully classified as tax deductible costs, placing it directly in the 13th column (other expenses) of the KPiR.
Initial Value Determination and Registration Fee
The purchase of a car by a taxpayer is also associated with the payment of a registration fee. The registration fee includes, among others, fees for issuing a new registration certificate, registration fees, control sticker, verification marks and the cost of purchasing new registration plates.
If the taxpayer decides to introduce the car to the fixed assets before registering it for himself, the registration fees will not be included in the initial value of the car. Of course, these fees can be included directly in the 13th column of the KPiR as tax deductible costs. On the other hand, if the taxpayer waits for the car to be put into fixed assets and first pays all registration fees, then they will be included in the initial value of the car. Consequently, they will also be included in the vehicle's depreciation charges.
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Untreated VAT and the initial value of a passenger car
Another issue arises when calculating the initial value. What to do if the entrepreneur will use the car for mixed purposes and thus - will not be able to fully deduct VAT from the purchase, but only 50%?
In this case, the answer can be found in the act cited above. It turns out that the non-deductible VAT increases the initial value of a fixed asset, in this case a car. It is also equivalent to higher depreciation charges.