We have learned another part of the dispute over cars used in business. It looks like the next project from the tax sealing cycle or the fight against aggressive tax optimization. However, planned changes to business cars are not a tool against the great organizations that cheat the Treasury. This is more about a group of small and medium-sized enterprises.
Cars serving at the same time for business and private purposes are a subject of controversy for a long time, not only in the Sejm room. This is sometimes such that, for example, tax authorities do not want to accept the tax-friendly line of jurisprudence of administrative courts. However, the government decided to simplify the whole matter with a loss to small entrepreneurship.
Reduction of privileges by half
At the beginning of the holiday season of this year we met the announcement of the Ministry of Finance, which did not meet with social enthusiasm. The inclusion of leasing instalments with revenue costs is planned to be halved. This was to apply only to mixed vehicles (i.e. business and private cars at the same time). However, such "mixed" cars are more of a rule than an exception to the rule among small entrepreneurs.
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Strong criticism prompted the government to modify the plan a little bit, and the adverse change eased. It was announced that the inclusion of leasing instalments as costs would be limited, but less than planned (deduction 75% instalments instead of 50% as in the original version).
The end of the holiday season brought another change of concept, which would not bring pleasure to entrepreneurs. The government has decided on modifications that could be described as a ‘back to the roots’ in the sense of refreshing the concept from the beginning of the holiday.
Lack of records is a higher tax
The term ‘service’ or ‘private’ or ‘mixed’ may in practice be problematic for an official who makes such an assessment. The government has decided to add a provision that resolves doubts, however, not necessary in a positive sense.
The draft provides that the lack of registration of the car, as specified in the VAT Act, means the recognition of the car as ‘mixed’. This means deducting only half the instalment (not 75% leasing instalment as planned at the turn of July 1 August).
The design of the changes we've met is not the final version. Much can change in the further stages of the legislative path. However, it is hard to resist the impression that there was some fiscal overzealousness. A group of small and medium-sized entrepreneurs using cars in the form of leasing became the target of another installment of the fight to seal the tax system. However, increasing the tax burden does not always result in more revenue to the State Treasury.
source: https://www.forbes.pl/prawo-i-podatki/samochody-w-dzialalnosci-gospodarczej-a-podatki/f7p72kz
Author: Andrzej Dmowski
Lawyer and Doctor of Legal Sciences of the University of Warsaw. From 2011 one from Corporate Management Partners Russell Bedford Poland. Previously on the BDO advisory network, as well as Deloitte & Touche. Author of the book “Transfer Prices”, co-author of the commentary “The Corporate Income Tax Act”, author of many publications on tax law.