The use of a passenger car in business activities as explained by the Minister of Finance
On April 9, 2020, the Minister of Finance issued Tax Explanations on costs, depreciation, and leasing of a passenger car used in business activity after the amendment of PIT and CIT regulations, which came into force on January 1, 2019.
As regards the transitional provisions, the MF clarified inter alia that:
- The new regulations do not apply to lease agreements concluded before 01.01.2019, however, the moment of physical delivery of the passenger car is irrelevant, unless the postponement was artificially delayed. On the question of amending the agreement,
- A division or spin-off of companies shall also be deemed to be an amendment or renewal of an agreement which results in the application of the new rules,
- The limit of PLN 225 000 for „ecological” cars may be applied from 01.01.2019,
- Both new limits: PLN 225 000 and PLN 150 000 do not apply to cars fully depreciated before 01.01.2019.
As regards the application of the new provisions, the MF clarified, among other things that:
- The exception to the application of „cost limiting” provisions does not apply to taxpayers whose business activity is to provide passenger cars for use for consideration. Where „donation” means the repetition of such contracts. In addition, it must be an activity falling within the company’s core business, ergo must not be ancillary. In determining what kind of activity it is, the registration entries (CEIDG, KRS), where the code 77.11.Z code is used, may be helpful but not prejudicial. leasing, carsharing, car rental,
- When selling vehicles, the maximum tax cost may be limited to PLN 150,000 and PLN 225,000, less depreciation charges,
- It was confirmed that NNW and third party liability insurance is not subject to the limits of PLN 150 000 and PLN 225 000,
- The limits for charging leasing fees in the BUY (PLN 150,000 and PLN 225,000) are the net amount + uncleared VAT, except for the following exceptions,
- The phrase „the value of a passenger car” used in income tax laws for lease agreements, etc. does not specify what value is involved and depends on the type of contract. However, in the case of an operating lease agreement, the sum of the agreed payments minus the VAT due at the same time must correspond at least to the initial value of the fixed assets subject to the lease agreement
- The BUY limit for using the taxpayer’s private cars for business purposes of 20% of their value also applies to „ecological” cars.