Passenger car worth over PLN 150,000 and depreciation
A car in business is basically a standard, but the correct method of its settlement in practice is one of the most problematic issues faced by entrepreneurs. In the case of passenger cars whose value exceeds PLN 150,000, the regulations introduce certain limitations in the settlement of costs. How to settle a passenger car with a value above PLN 150,000 and related costs?
Initial value of the car
The initial value of a fixed asset - a passenger car - is its purchase price, which is indicated on the purchase document, i.e. an invoice or a purchase and sale contract. This value is increased by the costs related to the vehicle incurred until the date of commissioning the given fixed asset for use. These can be, among others:
- expenses related to transport, unloading, loading, assembly,
- insurance on the way,
- stamp duties, registration fees and other charges (e.g. environmental or customs duties).
If the entrepreneur does not have a purchase document, the value of the fixed asset is determined on the basis of market prices.
It should be emphasized that all expenses related to the fixed asset incurred until its introduction into use increase its initial value. If these expenses are incurred after the car is entered into the fixed assets register, they can be booked directly in tax deductible costs.
Amortization of a passenger car with a value exceeding PLN 150,000
Pursuant to the Personal Income Tax Act, write-offs for the wear and tear of a passenger car on the value of the car exceeding the equivalent of PLN 150,000 - may not be deductible for tax purposes.
In order to calculate the depreciation period of a fixed asset, depreciation write-offs should also include the part that is not tax-deductible, ie above PLN 150,000. How does it look in practice? Regardless of the value of the passenger car, the entire initial value of the car is depreciated, but only a part of it, up to the limit of PLN 150,000, will be included in the costs. The depreciation begins in the month following the month in which the fixed asset was put into use.
On January 5, 2021, Mr. Piotr bought a passenger car for company purposes. The value of the car is PLN 160,000. The car was accepted for use by the company on January 5.
In that caseTherefore, write-offs up to the amount of PLN 150,000 will be a tax cost - the remaining part may not constitute a company cost.
The limitation in the accounting of the costs of a passenger car with a value exceeding PLN 150,000 covers not only depreciation charges, but also voluntary vehicle insurance, the amount of which is determined on the basis of, inter alia, the value of the insured passenger car.
Passenger car worth over PLN 150,000 and insurance
The limit on deducting costs related to a passenger car worth over PLN 150,000 also applies to voluntary vehicle insurance, incl. AC insurance. Premiums for voluntary company car insurance in the amount exceeding their part determined in the proportion equal to the equivalent of PLN 150,000 will not constitute a cost.
However, the limitation does not apply to third party liability and accident insurance, where the amount of the insurance premium does not depend on the value of the passenger car. In their case, the costs of obtaining revenue include the full amount of premiums for third party liability and accident insurance.
Accounting for an insurance policy depends on the method of recognizing costs in the KPiR (this method is not reported anywhere, but only used for corporate purposes consistently throughout the tax year): - in the case of the simplified (cash) method, the value of the entire policy may be included in the costs on policy issue, - in the case of the accrual method, if the policy period goes beyond a given tax year, the value should be divided proportionally into the months to which it relates.
The entrepreneur paid an insurance policy for the period from January 2021 to February 2022 in the amount of PLN 3,000. The costs are settled on the basis of the accrual method.
This value must be divided into 12 months (3000: 12 = PLN 250), and then multiplied by the number of months in a given year, i.e.
- from January 2021 to December 2021 - eleven months, so 250 * 11 = PLN 2,750 until 2021,
- from January 2022 to February 2022 - one month, therefore 250 * 1 = PLN 250 until 2022.
In simple terms, the amount for the year the policy was purchased can be booked on the date it is paid. The remaining part should go to the KPiR with the date of the next fiscal year - in accounting practice, for cleaning purposes, such expenditure is most often booked on 1 January.
Passenger car worth more than PLN 150,000 and expenses
The limitation of PLN 150,000 in the accounting of costs related to a passenger car being a fixed asset of the company or acquired under leasing or rental does not include expenses related to its operation, i.e. fuel purchase or other operating expenses (e.g. the cost of ongoing repairs, a car wash, purchase of car accessories) e.t.c.). In this case, the expenses that have been incurred for business-related purposes can be booked to costs:
- 75% of their value when the vehicle is used for mixed purposes, i.e. both corporate and private.
- 100% of their value when the vehicle is used only for the company's needs.
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Amortization of a passenger car above PLN 150,000 in wfirma.pl
When introducing a car to the register of fixed assets in the wfirma.pl system, depreciation write-offs will be automatically calculated based on its initial value, while only this part of the depreciation write-off will be posted to the tax costs up to the limit amount. The method of posting depreciation write-offs can be easily verified in the tab: RECORDS »FIXED ASSETS where, after clicking on the name of the fixed asset, a detailed view window will appear.
When you hover the mouse over a given write-off, a window will be displayed with information about the value of the depreciation write-off in a given month and what its value has been classified as KUP, i.e. tax deductible costs, and therefore booked in column 13 KPiR - Other expenses.