Fakty Komentarze Analiza (Facts Comments Analysis) l New rules of VAT settlement on car expenses

We kindly invite you to read the second edition of our bulletin.

Facts

As of 1 April, new rules regarding VAT on purchase and imports of motor vehicles, purchase and imports of fuel, as well as any expenses on their repairs, maintenance and use (including lease, leasing or other similar contract) will be introduced. This means considerable changes in VAT deductions in this respect.

Comments

At present, taxpayers who use their cares only for business purposes may take the necessary steps to deduct the entire amount of VAT on car expenses. Other taxpayers may only deduct half of the input VAT, however, in April only holders of non-passenger vehicles with the total weight of over 3.5 tonnes will have the right to such a settlement. Taxpayers who use the so-called “mixed” cars for business purposes will be able to deduct VAT this way as of July 2015.

Due to these amendments, taxpayers should make a review of their cars and trucks and classify them correctly. 

At the same time, it might be necessary to adjust internal regulations and implement procedures which will allow for using such vehicles for non-business purposes, i.e. employees traveling back home by their company cars etc. 

Analysis

Motorway tolls or parking fees might not give the right to full VAT deduction. This is due to the fact that as of 1 April taxpayers lost the right to deduct a full amount of input VAT on supply regarding maintenance or exploitation of vehicles used not only for business purposes. In this respect, the new regulation may be against the law.  

If you need tailored advice do not hesitate to contact us:

Mariusz Aleksandrowicz, attorney-at-law, tax advisor, partner in the tax law department

Marta Ignasiak, lawyer, tax advisor in the tax law department