Companies & corporate law

Settlement of expenses for passenger cars used for business and private purposes – change of regulations

At the end of August 2018, the Ministry of Finance published on the website of the Government Legislation Center a draft law amending the Acts on income tax for natural persons, income tax for legal persons, Tax Code and other laws change the rules for settling income tax when using passenger vehicles used for both business and private purposes.

The new regulations, from their entry into force on January 1, 2019, provide for the possibility of including only 50% of costs related to the use of passenger vehicles in tax deductible costs, while at the moment entrepreneurs can deduct 100% of these expenses from the company’s revenues. Therefore, the Ministry of Finance has adopted a similar solution introduced in 2014 to the Act on tax on goods and services.

The right to include 100% to the costs

The above changes will not apply to passenger vehicles, which the taxpayer uses only for business purposes. However, in this case, the taxpayer will be obliged to keep a special record of the vehicle’s mileage, to which he will be required to enter, among others description of the route, the purpose of the trip and the number of kilometers actually traveled.

Favorable changes for lessees

The new regulations will also affect taxpayers using vehicles through the use of leasing, renting and leasehold. For them, the maximum amount that can be counted as tax deductible costs is increased from PLN 75 000 zlotys up to PLN 150 000 annually.

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Author team leader DKP Legal Marcin Kręglewski
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