CONTACT PERSON :

1. Tax Alert / March 2014 CONTACT PERSON: NEW RULES FOR DEDUCTING VAT ON COMPANY CARS Dear Clients, please be informed that as of 1 April 2014, there become effective the new rules for deducting the input VAT in the event of acquiring, renting, leasing or using company passenger cars. As a result of the amendment, it will be possible to deduct the full amount of VAT paid by the acquisition of a passenger car or by the conclusion of an agreement for rent or leasing of a car if the conditions set out in the Act on value added tax are fulfilled. The said conditions include, inter alia, the obligation to maintain a register of business journeys and filing a proper information with the head of the tax office. In the event that the company car is used as well for personal purposes by an entrepreneur or their employee, it will be possible to deduct only 50% of the calculated tax. What is more, the regulations effective as of 2014 introduce a crucial change in the scope of deducting VAT on expenses for the use and maintenance of a passenger car. Pursuant to the rules which remain in force by the end of March 2014, the taxpayers are entitled to deduct 100% of VAT on said expenses. This rule will still apply to cars used only for business purposes. In the event that a car might also be used for personal purposes, it will be possible to deduct only 50% of VAT calculated on expenses for its use and maintenance. A crucial change is brought by the possibility to deduct the full amount of VAT on fuel purchased for company cars. It will be possible for the taxpayers to deduct the full amount of calculated VAT if the company passenger car is to be used only for business purposes. Otherwise, it is for a dozen or so months that this possibility will be excluded as the lawmakers have provided for the right to deduct 50% of VAT calculated on expenses incurred with regard to fuel for company cars used as well for personal purposes only from 30 June 2015. The amendments will significantly influence the settlements pertaining to handing the company cars over to the employees, both in the light of VAT and income tax. In the scope of settlements of costs and VAT connected with the maintenance of the company fleet, many procedures will require reorganization. Katarzyna Gajda Associate| doradca podatkowy katarzyna.gajda@bsjp.plT: +48 61 850 19 26 In the event that you are interested in further information on the introduced amendments and their implications for your business, please do not hesitate to contact us. The information in this publication should not be relied upon to replace professional advice on specific matters. We are happy to advise you on individual legal matters. If you would only like to unsubscribe from this update, please send us an e-mail to the following address: bsjp.tax@bsjp.pl BSJP Brockhuis Jurczak Prusak Sp. k., ul. Chmielna 19, 00-021 Warszawa, Tel. +48 222 793 100, Fax +48 222 793 111 E-Mail: info@bsjp.pl, Website: www.bsjp.pl