Company car with a lump sum

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Regulations ordering entrepreneurs to tax vehicles which are facilitated to private purposes of employees with a lump sum are supposed to come into force next year. The main assumption of those changes is ordering and simplifying tax settlements.

According to effective law, using a company car to private purposes is a revenue of an employee, which is a subject of taxation. At the moment, entrepreneurs are forced to find a way to calculate an employee’s income. Some companies practise so called operating costs per kilometre or bid of the CFM (Car Fleet Management) trade used while renting cars. There is a big chaos, about which a profession of tax advisers has been talking for years. Therefore, we are pleased that governmental proposals face those new expectations. The main aim of taxes should be obtaining revenues in easiest, cheapest and the least burdensome way for entrepreneurs. Flat-rate taxation of vehicles fulfils those conditions – comments Andrzej Marczak, bandmaster for personal taxes of KPMG in Poland.


After the amendment, employees will be obliged to add a fixed sum depending on an engine capacity of a vehicle to a basis taxation. The amount of the income for vehicles to 1600 cubic cm will total 250 zlotys per month, and in case of cars with larger engines – 400 zlotys per month. Proposed amounts of the revenue for employees more and less correspond to those which are currently being applied by employers – thinks Andrzej Marczak. – If this extra income is added to an employee’s basis of taxation, the amount of the tax, that is what an employee really pays, will total from 45 zloty to a few dozen zlotys per month. I think that the price is reasonable, and such way of regulating this matter will much simplify tax settlements.


If it turns out that in a peculiar month an employee did not use his company car, an employer will not be able to impose new regulations on him. The legislator also envisaged a situation, in which an employed will use a company car only partially to private purposes. Then the amount of the income may be proportionally cut, and a revenue’s value will be set for each day of using a vehicle to private purposes amounting 1/30 of a mentioned sum.


The amendment takes into consideration only relations between an employee and employer. Andrzej Marczak believes that it should be also extended to other relations, agreements or contracts – for instance commission contracts, contracts for work, manager contracts and partnership in management or supervisory board. Frequently, managers working on those titles basis also use company cars to private purposes, therefore it is worth to add those titles in a legislative process and do not limit this flat-rate and simple way only to employee-employer relation – finds bandmaster for Personal Income Tax in Polish KPMG department.


This week a government bill concerning facilitating the performance of an economic activity will be the subject of parliamentary commission for issues related to limitation of bureaucracy.

Tags: KPMG
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