Amendment of the Act on Value Added Tax
The Sejm-adopted amendment of the Act on Value Added Tax, which is to enter into force on 1 April 2014, changes the principles of VAT deductions from the purchase of cars with an allowable total weight of up to 3.5 tonnes and from the costs of their use.
When it comes to car-related expenses, the input tax amount will constitute 50% of the tax amount. That is also the case of fuel, repair and maintenance service costs, as well as expenditures on other goods and services related to car use, also for purposes other than a business activity, with the reservation that lowering the tax amount on the purchase of fuel will not be possible until 30 June 2015.
When a car is purchased to be then used solely for the purposes of a business activity, the taxpayer will be allowed to deduct 100% of the respective tax amount and 50% of the tax amount on car use expenses from the date of purchase, i.e. without any time limitation with respect to fuel.
The taxpayer is obliged to keep mileage records for cars used solely for the purposes of a business activity. If, within 60 months of the purchase date, there is a change to the manner of car use, the taxpayer will have to make a correction to the input tax amount deducted at the purchase.
Until 1 April 2014, the previous principles should be in force. Hence, a 100% tax deduction is only possible in the case of goods-carrying type approved vehicles. Also until that date, a 100% VAT deduction will be possible on fuel purchases, whereas after 1 April – that will only be 50%. Similarly, such will be the case with regards to car use expenses.
