Buying a car for the company how?

Buying a car for the company how?

Auto company is a great facilitation, so having him has become almost indispensable. With its acquisition of doubts arise for the purchase invoice or lease? Of course, much depends on individual circumstances, but when choosing wisely to know the pros and cons of both solutions. Check out how best to make and how to settle the purchase of automobiles for the company.

Buying a car on company

Buying a car at invoice it is usually associated with a relatively considerable expense, which finances itself or from the assets of the taxpayer, or a loan. Choosing the right form of purchase is dependent on the individual circumstances of the taxpayer.

The taxpayer must in principle be entered in the register of fixed assets a car with a value of more than 3.5 thousand. He should also give him depreciation according to the regulations under the Act on PIT. The entrepreneur can use two methods of depreciation, depending on whether the car is new or used:

  • linear standard depreciation period is 5 years (60 months), at the rate of 20% Schedule of rates, with a rate of an individual in the case of a used car (used prior to the acquisition of at least half a year), the annual rate is 40%, and the period shall be reduced to 2.5 years.

  • In order to be eligible as a deductible expense is required to meet conditions including:

  • documented expenditure,
  • demonstrate that the expenditure was incurred in order to achieve or secure sources of income,
  • expenditure was not excluded from the catalog deductible under Article. 23 of the Law on income tax from individuals.
  • The car company and the deduction of VAT
  • You should keep in mind the provisions relating to deduction of VAT when buying cars, and expenses associated with them. So, if the vehicle is used for the so-called. targets mixed in business and in private will have a 50% VAT on expenditure related to its current use and the purchase of fuel. In contrast, the right to full deduction when they use the vehicle only for the run undertaking. In addition, you must meet additional conditions:

  • register the car in the tax office on Form VAT-26,
  • keep detailed mileage records for VAT purposes,
  • create the terms of use of the vehicle in the company.
  • These conditions allow the exclusion of the vehicle for personal businesses and their employees, which would result in the loss of the right to deduct the full tax.
  • Buying a car for the company in the form of leasing

    Very popular is the purchase of vehicles for the company in the form of a lease. There are two variations:

      operating lease
      financial leasing.

    The first assumes that the object of the agreement is asset financing, which imposes a duty of depreciation. Financial leasing is the opposite thing the lessee enters it into their fixed assets and depreciation is made. Practice has shown that operational leasing is the most popular the reason is primarily lower costs at the beginning of the leasing period. The impact may also have it that in the financial leasing VAT must be paid in advance.

    For individuals engaged in the company it is necessary to conclude an operating lease agreement for a specified period, amounting to a minimum of 40% of the standard amortization period. Since it amounts to 5 years for passenger cars, the duration of such a contract must be established for at least two years. The beneficiary of an operating lease to deductible expenses may include:

      preliminary fees,
      handling charges,
      commissions
      lease payments,
      operating costs, maintenance and repair of leased things,
      expenses related to the adjustment of leased items to the business,
      the price of the contract after the lessee has the right to purchase the leased object at the end of the lease.

    Car leasing and VAT deduction

    Countdown VAT on cars leased in principle is the same as when buying on invoice. If it will be used both for private purposes and to conduct its business, the taxpayer is entitled to deduct 50% VAT from lease payments and other charges provided for the leasing contract, as well as costs associated with the current use of the car including the purchase of fuel. To be eligible for full deduction of VAT, must register a car company in the US, lead kilometrowke to VAT and to create appropriate regulations. Buying a car for your company what method to choose?

    When choosing how to purchase a passenger car for the company you have to look not only from the perspective of assets, but also the tax. Operating leases breaks down costs of buying time, so liquidity is less disturbed. In this case, the car is not a component of the company's assets, so no write-downs made in the framework of amortization. The costs of this lease fees and expenses for the operation.

    When it comes to buying a car on the invoice, it involved a one-time, big expense, which is a considerable burden for the company when the transaction is paid by means of the current account activity. The benefits in the tax area also did not look inviting you can not type flow directly to the costs, you have to use a spread-time writedowns.

    The decision about selecting the method of buying a passenger car for the company is dependent on a multitude of variables. You have to keep in mind the property entrepreneur, type of business, and within the perspective of tax benefits. To choose well, you should estimate the cost-effectiveness of available alternatives.

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