Part. 3 Deduction of tax on motor vehicles, exemptions and imports

Deduction of tax on motor vehicles

The draft amendment to the VAT Act enacted on 24 June 2021 also includes some changes to Article 86a regulating limitations of deduction for the so-called motor vehicles, i.e. motor vehicles within the meaning of the provisions on road traffic with a permissible total weight not exceeding 3.5 tonnes, affected by a 50% limitation of input tax deduction at purchase and operating expenses.

The proposed changes in this respect may not be revolutionary, but in my opinion they may make life easier for taxpayers. They only concern the form notifying the use of motor vehicles exclusively for business activity (currently VAT-26). According to the current rules, this form should be submitted within 7 days of the date on which the taxpayer incurs the first expense related to these vehicles. At the same time, it is only from the date of submission of the form that the vehicle is considered to be used exclusively for business activity, ergo only from that date that the tax deduction is due. Finally, the last amended deadline relates to the obligation to submit an update to the above information in the event of a change in the manner in which the vehicle is used. Currently, this must be done no later than on the day on which he makes this change.

There is no denying that all the above-mentioned deadlines could fall in the middle of the month, which caused practical problems in their application, e.g. for part of the period the vehicle gave the right to deduct and for another part it did not. Therefore, the amendment provides for 3 significant simplifications:

• The information on the use of vehicles exclusively for business activity will be submitted by the 25th day of the month following the month in which they incur the first expense related to these vehicles – which is a significant extension of the deadline allowing the expenses to be put in order by the tax settlement deadline for the previous month (i.e. the month in which the expense was incurred),
• – Submiting the information will result in the vehicle being deemed used exclusively for business activity from the first day of the month in which the taxpayer submits the information.
• Updating the information in connection with the change in the manner of use of the vehicle will have to be submitted no later than the end of the month in which the change was made.

The above provisions, in accordance with the transitional regulation, will apply in the case of expenditures relating to motor vehicles used exclusively for business activity, incurred from the date of entry into force of the amending act.

Import – changes with regard to the simplified procedure

The procedure in question concerns the possibility to settle the import VAT in the tax return for the period when the tax obligation arose. In this regard, the changes mainly concern the issue of accounting for these imports after the deadline for filing such a return.

Firstly, a procedure is to be introduced enabling settlement of importation after the deadline by making a correction to the tax return within 4 months, counting from the month following the month in which the tax obligation related to importation of these goods arose.

Secondly, a change will be introduced regarding the issue of timely settlement of import VAT. Currently, a taxpayer who has opted for settlement of tax due for importation of goods under the simplified procedure and fails to settle the tax in whole or in part under these rules, loses the right to settle tax in a tax return in relation to the amount of tax due for importation of goods, which he failed to settle in the tax return. The taxable person shall be obliged to pay the amount of the tax together with interest to the head of the tax office competent to collect the amount of import duties resulting from the customs debt.

The change in this respect is in fact only related to the introduction of the possibility to settle by way of correction and the above-mentioned effect will only occur after the lapse of the 4-month period.

Exemption of supplies of immovable property – facilitation of resignation

A very important change will concern notifications on the resignation from the exemption for the supply of real estate provided for in Article 43(1)(10) (i.e., in simplified form, real estate sold after first occupation). Until now, the choice of taxation was subject to notification to the head of the tax office competent for the purchaser before the date of supply. The amendment preserves this possibility, but it also gives the possibility to make a statement on taxation simply in the notarial deed of disposal of the real estate without the need to submit a notice to the authority.

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