A government-initiated draft law to amend the Personal Income Tax Act, the Corporate Income Tax Act and certain other acts was transmitted to the Sejm on 25 September 2018 (parliamentary paper no. 2854).

As we mentioned in our previous newsletters, the projected regulations provide for a number of changes in the corporate income tax (CIT) framework, including in the tax treatment of passenger cars used for business purposes.

One of the proposals is to increase to PLN 150,000 (or to PLN  225,000 for electric cars) the car value threshold above which depreciation charges will be allowed for tax purposes. At the same time, the government wants to limit the tax-deductibility of the charges payable for use of e car under lease, rental or similar contract; they would be deductible pro rata to the PLN 150,000 (225,000) threshold (including unrecoverable VAT).

On the other hand, 25% of the car's running expenses would not be deductible if the taxpayer does not keep records evidencing that his car is used solely for business purposes.

Please note that when the draft was being processed in the Sejm on 5 October 2018, the Public Finance Committee made further modifications intended to limit the deductibility of costs recognised on sale of a purchased car which has been recorded as the firm's tangible asset. According to these proposed provisions, on sale of a purchased passenger car recorded as the firm's tangible asset, the available tax deduction will equal the purchase expenses revalued according to relevant provisions, to the extent they do not exceed the relevant thresholds (PLN 150K or PLN 225K), less the total tax depreciation deductions.

The new law proposes transitional provisions:

  • lease, rental or similar contracts involving passenger cars and executed before 1 January 2019 will continue to be governed by the old law;
  • lease, rental or similar contracts involving passenger cars and executed or renewed after 31 December 2018 will be governed by the new law as amended;
  • the limit on the tax-deductibility of expenses at the time of sale of a passenger car will apply to cars recorded as tangibles after 31 December 2018.

The draft law has passed its first reading and been transmitted to Sejm committees.

If this issue pertains to your business and you are interested in our assistance, please contact your WTS&SAJA consultant or our office.

Doradztwo Podatkowe WTS&SAJA Sp. z o.o.

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60-829 Poznań

tel. (+48) 61 643 45 50

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This Newsletter is provided for general information purposes to keep you up-to-date with changes in tax law, tax rulings by authorities, case law of courts and interesting commentaries. Doradztwo Podatkowe WTS&SAJA shall not be held legally liable for any acts or omissions resulting from reliance on such information.

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