The Ministry of Finance announced plans to amend the regulations on income tax. Most of them can be considered as good. However, there are those who question the planned changes related to leasing of cars.
Of course, when it comes to the assessment of such plans, it is best to wait for the bills (drafts of new regulations) to be published (it is worth to remember about fine things, indeed, that appeared in the amendments to the tax regulations from January 1, 2018).
Among the announced changes, one that should be considered quite significant regards the inclusion of expenditure on the purchase of passenger cars in the tax deductible expenses.
The maximum amount that will be included in the tax deductible costs in connection with the purchase of a car will be PLN 150,000. This is a significant difference compared to the current limit of EUR 20,000.
However, what is important, the abovementioned cost limit is to apply when the car is leased (based on “leasing” agreement – one that ends with the car being acquired) – it will be the maximum value of leasing installments that can be included in the tax deductible costs.
Currently, rather absurd regulations make leasing a possibility of settling much higher tax-deductible expenses when purchasing cars (and thus, ultimately, paying a lower tax) than purchasing a car with a loan or with “cash” (without external financing). This is because when you simply buy a car, the abovementioned limit of EUR 20,000 of tax-deductible costs applies. When you use the car based on a leasing contract, then all the payments for the leasing can be treated as costs – which means that it is popular for acquiring more expensive cars.
If the changes come into force, this will mean that leasing will partly lose its tax advantage when purchasing more expensive cars.
The form of financing the purchase of a car (own funds/loan/leasing) will therefore be determined by economic considerations (cash-flow, financing costs) and less by a tax effect.
What’s more, regardless of the form of financing, only 50% of expenses related to the purchase of a car (depreciation note or leasing installments) will be considered as tax-deductible, if the car is also used for private purposes.