Service-Tax

VAT on cars - type C armored vehicle

Until the end of 2013, a taxpayer using a C-type armored vehicle in his company could deduct 100% of VAT from invoices for the purchase of a vehicle, leasing installments, fuel purchases or even repairs, parts and other operating expenses. However, as of April 1, 2014, the regulations in this matter have changed. Does an entrepreneur, having a type C armored vehicle, still have the right to a full deduction of VAT? What is the VAT deduction for cars of this type currently? We explain below.

VAT on cars - new groups of vehicles

The new regulations divide vehicles into three main groups:

Group I - vehicles with the right to a full VAT deduction without the need to prove that they are used only for business purposes;
Group II - vehicles with the right to a full VAT deduction, requiring the taxpayer to perform additional formalities and keep additional documentation to prove that it is not used for purposes other than the conducted activity;
Group III - vehicles entitling to partial (50%) VAT deduction, where it is assumed in advance that the car may be used for purposes other than business and no additional registration or reporting obligations are imposed on the taxpayer.

Type C bank truck - type of vehicle

The first group includes: special vehicles referred to in art. 86a paragraph 9 point 3 of the VAT Act, including:

electric / welding aggregate,
special vehicles for drilling work,
excavator, backhoe-bulldozer,
charger,
a hoist for maintenance and assembly works,
truck crane.

However, this is not the end of the list, it has been extended by the Regulation of the Minister of Finance of 27/03/2014 on motor vehicles considered to be used only for the taxpayer's business and additionally includes special purpose vehicles:

funeral,
armored vehicle - only type A and B

- if they have one row of seats or their permissible total weight is greater than 3 tonnes.

Although the C-type armored vehicle was a special vehicle so far, according to the above-mentioned regulations in force from April 1, 2014, it does not qualify for the 1st group of vehicles, from which the taxpayer could fully deduct VAT without the need to complete additional formalities.

VAT on cars after changes - type C armored vehicle

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A full deduction of VAT on the purchase of a type C armored vehicle and operating expenses is possible only if the entrepreneur proves that the vehicle is used only for the purposes of the business. To do this, you need to do three things:

report the car to the tax office on the VAT-26 form,
run a mileage test for VAT purposes,
introduce the regulations for the use of the vehicle in the company.

The above is also confirmed by the Minister of Finance in the explanations - New rules for deducting VAT from expenses related to motor vehicles:

The absence of certain vehicles in the statutory (supplemented in the implementing regulation) catalog of certain vehicles that have so far benefited from the full right to deduct (eg type C armored vehicles) does not mean that these vehicles are automatically classified as mixed use vehicles. For if the statutory criteria of objectivity are met (the manner of using these vehicles, specified in the rules of their use established by the taxpayer, additionally confirmed by the vehicle mileage records, excludes the use of this vehicle for purposes not related to business activity), taxpayers using these vehicles only for business activities will have
the right to a 100% deduction of VAT on expenses related to these vehicles.