Passenger car in business activity - limitations in cost settlement


Today, practically every entrepreneur uses passenger cars in his company. It is hardly surprising - it is the convenience of business trips and considerable time savings. Business owners often use vehicles that they previously entered into the register of fixed assets, or use them on the basis of a lease or loan agreement. Moreover, taxpayers also often use their private cars in the company.

Owning and using cars in a company is associated with necessary expenses - such as fuel or the purchase of spare parts. In this case, however, it is necessary to bear in mind the limitations that appear in terms of accounting for passenger car expenses in tax deductible costs specified in art. 23 of the Personal Income Tax Act.

In art. 5a, point 19a, p.p.d.o.f. there is a definition which says that a passenger car is any motor vehicle weighing less than 3.5 tonnes and designed to carry a maximum of nine people, including the driver.

Passenger car - fixed asset

The PIT Act guarantees taxpayers the possibility of introducing a passenger car to the register of fixed assets - then the initial value is accounted for in tax deductible costs based on depreciation write-offs. However, there are conditions that must be met in this case: the car must be owned or jointly owned by the taxpayer and must be used as part of the company's needs. Going further - it must be complete and operational on the date of acceptance for use, and the expected useful life cannot be shorter than a year.


The depreciation write-offs of a passenger car that has been entered into the EŚT are a tax-deductible cost of the company.

The regulations contain specific limits on the depreciation of such vehicles. In art. 23 sec. 1 point 4 it is clearly stated that the costs cannot be write-offs for the wear and tear of the passenger car, in part determined on the value of the car exceeding the equivalent of EUR 20,000 converted into zlotys according to the average EUR exchange rate announced by the National Bank of Poland on the day the car is put into use.

Example 1.

The taxpayer purchased a passenger car worth PLN 95,000 and then entered it into the fixed assets register. The average exchange rate announced by the National Bank of Poland on the day of admitting the vehicle to the register was 4.30 PLN / EUR, so the conversion limit is:

4.30 PLN / EUR x 20,000 EUR = 86,000 PLN

Importantly, Art. 23 sec. 1 point 45 of the act says that the tax costs are not also depreciation write-offs from the initial value of fixed assets, including passenger cars, financed, for example, by a subsidy.


Fixed assets whose initial value does not exceed PLN 3.5 thousand are not subject to depreciation. Expenditure on the purchase of passenger cars in this category can be classified as one-off tax costs during the period of putting them into service.

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All expenses that the taxpayer incurs in the operation of a passenger car - a fixed asset - in the activity may be included in tax costs in the full amount. The exception is the voluntary insurance, described later in this article.

Failure to bring a passenger car to the register

Another, commonly occurring in practice, possibility is the use by owners of private companies of passenger cars - not entered into the CEE or made available on the basis of a civil law contract. In this case, all expenses related to the use of a specific vehicle in the company must be settled in accordance with the provisions of art. 23 sec. 1 point 46 u.p.d.o.f.

According to their content, the taxpayer is obliged to conduct the so-called mileage records, i.e. vehicle mileage records for income tax purposes. Its introduction helps to determine in what amount the expenses incurred for the operation actually relate to the company's needs.

They can be classified as tax costs only up to the set limit, which results from the mileage. It is determined by multiplying the number of kilometers actually traveled in connection with the business run by a specific rate per kilometer. The rates for passenger cars depend on the engine capacity and are as follows:

  • PLN 0.5214 - with an engine capacity of up to 900 cm3,
  • PLN 0.8358 - with engine capacity above 900 cm3.


If the taxpayer does not keep a record of the vehicle mileage, then expenses on a passenger car not entered into the register of fixed assets may not be included in tax deductible costs.

If the value of the expenses incurred is lower than the limit resulting therefrom, then the entire amount is entered into the tax costs. Conversely, the costs are only expenses within the limit, and the surplus is carried over to the next period - the month - of the tax year.

In addition, a business owner can increase tax deductible expenses by expenses incurred by employees who use private cars for corporate purposes. Here, too, we are dealing with a restriction under Art. 23 sec. 1 point 36 - that is, with the need to keep records of the mileage of the vehicle, which is the basis for calculating the value of costs reimbursed by the entrepreneur.

The catalog of expenses for maintenance and day-to-day use that can be accounted for in the mileage register includes, among others, fuel purchases, insurance premiums, expenses for spare parts and repairs, inspections, parking and motorway tickets. The exceptions include the cost of rent under the rental agreement or the lease of a passenger car used for company purposes. They are settled without limit, i.e. in full amount, directly in tax costs. This is confirmed by the general interpretation of the Minister of Finance of November 8, 2013.

Car trading and costs

Taxpayers who run companies selling cars are not subject to limits on the settlement of vehicle operating costs. As these cars are the company's commercial goods, all expenses incurred for their maintenance and operation are settled in full amount. Entrepreneurs do not have to keep mileage records for cars intended for trade, although they have not been entered into the company's assets. The exceptions are car insurance premiums, for which there is a limit specified in Art. 23 sec. 1 point 47.

Car insurance - restrictions

In the case of a passenger car, two types of insurance can be distinguished - compulsory (civil liability) and voluntary. As for the first type, there are no restrictions. When it comes to voluntary insurance, which depends on the value of the car, the limits are already appearing.

Art. 23 sec. 1 point 47 imposes a limitation according to which the costs in terms of taxation are not premiums for car insurance in the amount exceeding their part determined in such proportion as the equivalent of EUR 20,000, converted into zlotys according to the selling rate of foreign currencies announced by the National Bank of Poland on the day of concluding the insurance contract in the value of the car assumed for insurance purposes. Importantly, the described regulations apply only to the motor own damage insurance (autocasco), the value of which depends on the value of the passenger vehicle.

Example 2.

The same taxpayer (from the first example) also signed a voluntary AC insurance contract on the day the vehicle was put into use. The value of the car for insurance purposes is the same as the purchase price and amounts to PLN 95,000, while the selling rate of NBP currencies was: 4.20 PLN / EUR.

The percentage of the insurance premium that can be included in tax costs is therefore:

20,000 EUR x 4.20 PLN / EUR / 95,000 PLN x 100 = 88.42%

- the remaining 11.58% is excluded from tax deductible costs.


The limit for including contributions for voluntary AC insurance to tax costs applies to each passenger car that is used in the company. That is, it applies to both vehicles introduced and not entered into the CEE.

Having a voluntary car insurance is also important to include in the costs of expenses related to post-accident service or liquidation of cars. Pursuant to Art. 23 sec. 1 point 48 u.p.d.o.f. the following can not be entered in the tax deductible costs:

  • losses resulting from loss or liquidation,
  • expenses incurred on accident repairs

- cars not covered by voluntary insurance.

Operating lease

The Personal Income Tax Act indicates that operating lease applies to a situation in which the financing party gives the other party (user) for use against payment - on the basis of the conditions described in the Act - fixed assets that are subject to depreciation. In this situation, all fees resulting from the leasing contract, which are borne by the taxpayer in connection with the use of the vehicle, may be fully recognized in tax deductible costs.

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In the case of people running a business, a leasing contract should cover a period which is at least 40% of the normative depreciation time - as long as the subject of the contract is movable property that is subject to depreciation write-offs. For passenger cars, the standard amortization period is 5 years, i.e. the smallest possible lease period is two years. In turn, the sum of the fees stipulated in the contract, reduced by the VAT due, should correspond at least to the initial value of the fixed assets.

Joke. 23 sec. 3b u.p.d.o.f. it can be concluded that the current costs of maintaining and operating the car that is the subject of the lease are not accounted for in the vehicle mileage record and related limitations. This means that the user of such a car may enter the full value of such expenses in the tax deductible costs - with the exception of the voluntary insurance described above.