Car - costs and VAT

Car - costs and VAT

 

Question:
Hello!

I have a car in my name as a private person. Can I transfer the car to the company to use a tax credit and invoices to be an expense?

The car has 4 + 1 seats, probably following the example of sales representatives or employees with company cars.

Thanks in advance!

 

Answer:

Hello,

In principle, you can sell the car to the company, but the company will not use a tax credit. In order to use a tax credit, the car must be purchased by a company, which must pay VAT on the sale upon sale. There is an option if you are registered for VAT as an individual, but you are unlikely to fall into this case. And anyway, even if the conditions were met, the car must be 6 + 1 or be homologation (so-called N1). In short, with the purchase of the car from the company in the current situation you can not use a tax credit for its purchase.

However, when renting the car from the company, the requirement for it to be 6 + 1 is dropped, so that this 4 + 1 can be rented and eventually its costs can be used. For this purpose, the company's activity must require such a company car. It does not make sense, for example, for a software company to use a company car. In the very example you mentioned for company cars, it is about sales representatives, but their work presupposes such a car and the fact that it is used for the purposes of the company. Since the car is personal, personal expenses must somehow be separated from business expenses. There are different ways to do this, the cleanest is to write waybills, which describe each business course, with distance, route and purpose of the trip, as well as which employee of the company takes the course. Then the total kilometers for the period (months) are considered and it is seen in what proportion they are (business to personal). All costs are divided in this ratio. But again, this is possible if the car is rented and if it is reasonably related to the company's activities.

When renting a personal car to the company, you as an individual will have to include the rental income in your tax return and pay 10% tax on them.

We hope we have been helpful to you.

Greetings!