Expenditure within the mileage allowance for PIT purposes
An entrepreneur who uses a passenger car for business activity, not entered into the register of fixed assets, in order to settle costs, is obliged to keep a record of the vehicle mileage, commonly referred to as mileage record. Check what mileage expenses can be included in company costs!
Mileage expenses as tax deductible expenses
Based on the vehicle mileage records, taxpayers may include as tax deductible expenses incurred in connection with the use of the car for business purposes. These expenses, however, may be included in the costs only up to the limit resulting from the multiplication of the number of actually traveled kilometers and the rate for 1 kilometer of mileage.
This issue is regulated precisely by Art. 23 section 1 point 46 of the Personal Income Tax Act. Pursuant to this provision, the costs of using a passenger car not entered into the register of fixed assets, including that owned by a person running a business, for the purposes of the taxpayer's business activity, in part exceeding the amount resulting from the multiplication of the number of kilometers of the actual mileage, are not considered to be tax deductible costs. vehicle and the rate for 1 km, specified in separate regulations issued by the competent minister.
The rates for 1 km of the vehicle mileage have been specified in the ordinance of the Minister of Infrastructure and are as follows:
- for a car with a capacity of up to 900 cm3 - PLN 0.5214,
- for a car with a capacity of 900 cm3 - PLN 0.8358,
- for a motorcycle - PLN 0.2302,
- for a moped - PLN 0.1382.
Pursuant to the Act, the condition for including costs relating to a car not constituting the company's property as costs is the necessity for the vehicle to be the property of:
- company employees,
- a third party, used on the basis of a rental, lease, lending agreement, etc.
How to drive a mileage test?
Vehicle mileage records are necessary to determine the number of kilometers actually traveled by the taxpayer. Such records should be kept separately for each vehicle and should include:
- surname and first name of the person using the vehicle,
- her home address,
- Vehicle registration number,
- engine capacity,
- next entry number,
- purpose of the trip,
- description of the route (from where to where),
- the number of kilometers actually traveled,
- the rate for 1 km of mileage,
- the amount resulting from the multiplication of the number of kilometers actually traveled and the rate for 1 km of mileage,
- signature of the taxpayer (employer) and his data.
What expenses count as mileage?
As part of the mileage allowance, people running a business can settle all expenses related to the use of a passenger car for business purposes, not entered into the register of fixed assets. Such expenses include:
- fuel purchase,
- vehicle rental costs,
- parking fees,
- motorway tolls,
- car wash and maintenance services,
- repairs and spare parts,
- inspections and maintenance services.
- car insurance premiums.
In the case of insurance costs, within the limit resulting from the vehicle mileage register, the costs of the insurance premium may be included in the tax deductible costs:
- OC and NNW,
in an amount not exceeding their part determined in the proportion equal to 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 date of conclusion of the insurance contract, in the value of the car adopted for insurance purposes.
Statement of operating costs
Expenses for the use of a passenger car, which is not the company's property, are recognized in column 13 of the tax book of revenues and expenses, with one entry at the end of the month. The records are based on the statement of expenses prepared by the entrepreneur. This statement should consist of relevant documents (bills, invoices) that will clearly confirm the specified expenses.
A breakdown of the cost of operating a motor vehicle usually includes:
- consecutive number of the entry,
- purchase document number,
- date of the purchase document,
- specification of the type of expenditure incurred,
- value of the expenditure incurred (in gross or net amount).
Settlement of kilometers
The expenses within the mileage are calculated cumulatively from the beginning of the year. This means that at the end of the settlement period (month), in order to determine tax deductible costs, two amounts should be compared with each other: the cumulative amount resulting from the multiplication of the number of kilometers traveled and the rate per kilometer, and the amount accumulating from the beginning of the year resulting from invoices and bills documenting expenses incurred in connection with the use of the car. If in a given month the expenses incurred exceed the limit defined by the number of kilometers traveled and the rate per kilometer traveled, they are not tax deductible expenses in the current month. However, they can go to the settlements of subsequent periods, if the mileage limit allows it. If the expenses incurred in the current period are lower than the mileage limit, the total amount is tax deductible and the unused mileage limit is transferred to the next settlement period. This means that we may incur higher expenses in the next period (assuming the same mileage limit). Entrepreneurs cannot transfer any excess mileage limit in a given year to the next tax year. The end of the year also means the end of the vehicle mileage records for a given year.
Vehicle mileage records - necessary documentation
It should be remembered that keeping a record of the vehicle mileage is not enough for the expenses related to the use of the car to be recognized as tax deductible costs. According to the PIT Act, in all cases, except for the lump sum, the expenses incurred by the entrepreneur should be properly documented by him at the end of each month. In the absence of records and appropriate documents confirming the expenditure, the costs incurred by the taxpayer for the use of cars for the purposes of the business will not be included in the tax deductible costs.