This is to let you know that the Finance Ministry has issued a communication on how coronavirus-related changes to passenger car leases executed before 1 January 2019 affect the tax treatment of lease payments.
A new cap was introduced on 1 January 2019 on amounts which may be deducted for income tax purposes in respect of leases or similar arrangements. For leases of passenger cars worth above PLN 150,000, the lease payment deduction is capped at the ratio of PLN 150,000 (or PLN 225,000 for electric cars) to car value.
These deduction limits do not apply to contracts executed before 1 January 2019, but do apply to leases or similar arrangements which have been amended or renewed after 31 December 2018.
The existing coronavirus situation has prompted many lessees to enter into agreements with leasing firms to reschedule their lease payments. This has led to a controversy whether a lease executed before 1 January 2019 but later amended to extend payment deadlines due to COVID-19 will allow the lessee to retain its vested right to make the related deductions without regard to the PLN 150,000 limit.
The new communication from the Ministry resolves that controversy: “The new tax regulations will not be triggered by a lease contract amendment due to COVID-19 which does not affect the amount of lease payments available for deduction for income tax purposes but merely defers these payments.”
If this issue pertains to your business and you are interested in our assistance, please contact us.
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