Changes in taxation of the private use of company cars since January 1, 2015

The taxation of private use of company cars by the employees was a subject of many disputes between companies and tax authorities. There were no detailed regulations, so the general principles applied. The companies were in the position to calculate the value of this benefit for their employees by themselves. Whatever the method was it was often questioned by the tax authorities that had his own opinion about the proper solution. Due to the lack of regulations many companies didn’t calculate this benefit at all, what made their situation in relation with the tax officers very weak – in fact they had to accept the position of the tax authorities. It seems over now.
 
On November 27, 2014 the Act of November 7, 2014 on facilitating execution of the economic activity was published in The Journal of Laws. The Act contains a change in the law on income tax from individuals and introduces taxation of private use of company cars. Starting January 1, 2015, employees will pay a flat tax the additional benefit they have got in respect of it in the amount of the 250 PLN per month – for cars with engine capacity up to 1600 cm3 or 400 PLN per month – for cars with engine capacity of over 1600 cm3.
 
This solution creates an issue in corporate income tax – part of the costs of the car related to personal use of the employee is not deductible, because it is neither related to gaining of the revenues nor protecting them.
 
The act shows indirectly a possibility to avoid the problem by making the above amounts payable by the employee that was a solution used my many companies also before and is free from risks described in the preceding paragraph.

 

Author: Tomasz Wiklinski, THOMAS sp. z o.o., Warzawa