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Cars for business are VAT exempt


Since 1 July 2015, taxpayers using cars exclusively for business purposes can deduct the full amount of the input VAT with respect to the operating expenses. Taxand Poland explores.

Entrepreneurs can deduct the full amount of VAT on the purchase or use of cars and related operating expenses, if these cars are used exclusively for the purposes of economic activity.

There are additional conditions regarding registration obligations, which include submission of information VAT-26, keeping detailed records of a car’s mileage and introducing regulations defining rules for its use within the business activity.

These requirements also bring other administrative costs. If any mistakes are made, e.g. recording of the car’s mileage incorrectly, then the taxpayer may be exposed to tax audits. In the worst scenario, it can lead to fiscal criminal responsibility.

Discover more: Difficulties in deductibility of VAT on car expenses is not enough 

Your taxand contacts for further queries are:
Andrzej Puncewicz
T. +48 22 324 59 00

Pawel Tonski
T. +48 22 324 59 00

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Taxand's Take

As we can see, seemingly favourable provisions of VAT law may cause a lot of difficulties for entrepreneurs. The right to deduct the full amount of VAT is subject to numerous conditions, which is also emphasised by the tax authorities indicating limited possibilities of its application in the tax rulings. 

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