Current situation
Under the current provisions of the PIT Act, entrepreneurs who have decided to purchase a car from a lease agreement for their private assets will be liable to pay income tax on the sale of that car, provided that the sale takes place within six months from the end of the month in which the car was acquired (Article 10(8) of the PIT Act). Conversely, the sale of a car bought out into private assets after the expiry of the aforementioned period does not currently result in an obligation to recognise income from that sale.
What does the Polish Deal say?
Under the provisions of the Polish Deal, the sale of a car that was used in business activities under a lease agreement, even if the car was withdrawn from such activities prior to the sale, will be subject to PIT if six years have not elapsed between the first day of the month following the month in which the car was withdrawn from business activities and the date of its sale (Article 10(2)(4) in conjunction with Article 14(2)(19) of the PIT Act, as amended following the entry into force of the Polish Deal).
Existing rules apply only to cars purchased by 31 December 2021
The transitional provisions included in the draft Polish Deal indicate that changes to PIT taxation on the sale of cars purchased for private use will apply to cars acquired (purchased) after 31 December 2021 (Article 51 of the draft Polish Deal). Consequently, buying out a leased car into private ownership before that date will allow taxpayers to apply the existing rules.
The changes will also affect VAT
Unfortunately, the changes described above will also have consequences for the VAT treatment of car buy-outs. Currently, in practice, VAT is generally paid on the amount of the final lease instalment. However, under the provisions of the Polish Deal, VAT will be paid on the vehicle’s actual market value, rather than on the buy-out value.
What will be the effect of these changes
The ultimate aim of these changes is, of course, to curb the practice of removing post-lease vehicles from companies for nominal sums, which the Ministry of Finance has targeted.
Unfortunately, the changes described above will affect businesses that have already entered into lease agreements and accepted the specific tax consequences in accordance with the regulations in force at the time the lease agreements were concluded. Ultimately, unfortunately, as a result of changes to the applicable rules during the term of these agreements, they will not be able to count on the intended effect.
I specialize in Polish tax law, particularly income taxes, as well as international tax law. My experience includes, among others. providing ongoing tax advisory services, preparing legal and tax opinions, drafting requests for individual interpretations, conducting tax reviews. I gained professional experience in Warsaw law firms.
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