Poland

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4.1 Car taxation

• According to the Polish law, the following taxes/fees are due with regard to cars:
  • Value-added tax (VAT);
  • Excise duty on passenger cars supplied before their first registration in Poland;
  • Car registration fees;
  • Tax on transportation means;
  • Fee for using the national roads;
     
• Car registration fees
  • Chargeable event: The fee for issuing the registration card along with stickers as well as the fee for issuing number plates are charged every time the vehicle is registered or re-registered (e.g., as a consequence of change of the vehicle’s ownership). Additionally, if the car is registered for the first time in Poland, the fee for issuing the vehicle card is charged.
  • Chargeable person: the fees should be settled by a person who is requesting the registration of a vehicle.
     
• Fee for using the national roadsµ
  • Taxable event: The fee for using the national roads is due for vehicles with a certain gross mass (maximum total weight exceeding 3.5t) and buses.
  • Taxable person: The fee is payable by a person performing transport on the national roads.
     
• Tax due: In July 2011 Poland launched the electronic system of charging the fees for using the national roads for transport indicated under relevant provisions. It covers fees due on vehicles with a maximum total weight exceeding 3.5t and buses. The fees are charged based on the distance driven on the road covered by the system and the rates are in PLN per kilometre. The rates vary depending in particular on the
  • category of vehicle;
  • maximum total weight of a vehicle;
  • exhaust fumes emission class.

Persons performing transport on the national roads should possess an electronic device that records the distance covered by a given vehicle.

4.2. Income tax – Taxable persons

• A passenger car is a road vehicle with a maximum total weight of 3.5 tonnes, designed to transport no more than nine persons including the driver except for:
  • vehicles having one row of seats separated from the cargo hold with a wall or another fixed partition, classified as multi-purpose cars or vans;
  • vehicles having one row of seats with an open cargo hold;
  • vehicles having driver’s cabin with one row of seats and cargo hold body as two separate constructions;
  • vehicles of a special purpose, e.g., truck-mounted cranes, excavators etc.
     
• The part of depreciation write-offs calculated on the initial value of a passenger car exceeding the PLN equivalent of 20,000 EUR does not constitute tax deductible cost. Moreover, CIT Law limits the deductibility of insurance premiums for a passenger cars, the value of which exceeds 20,000 EUR (only part of share premiums is tax deductible).
   
• Based on the Polish CIT Law, the expenditures related to the use of a car, which does not belong to the taxpayer, constitute the tax deductible costs up to the limit calculated as a number of business kilometre travelled multiplied by a rate per kilometre or, in particular cases, up to the monthly lump-sum limit. The above-mentioned expenditures include e.g., fuel or costs of repairs. According to the latest tax authorities’ position the costs of rental payments should be treated as tax deductible without any limitation.
   
• Regardless of the above, in the case of an operational lease the whole amount of lease fee paid by the lessee constitutes his tax deductible cost.
   
• Regulations concerning trucks: In the light of the Polish CIT provisions,
  • depreciation write-offs and insurance premiums relating to trucks constitute tax deductible costs in full amount and
  • costs of use of a rented truck are fully deductible for tax purposes.​


• In case of any damage to or liquidation of a vehicle, which was not covered with the voluntary insurance, any losses or repair costs after the car accident do not constitute tax deductible costs.
   
• Leasing: Below is a summary of general information concerning:
  • conditions that need to be fulfilled in order to classify an agreement related to a lease of a vehicle as an operational or financial lease under the CIT Law;
  • tax consequences resulting from the above-mentioned classification.

Classification of leasing agreements for CIT purposes

4.3. Company cars

• VAT due on private use of company cars: As a rule, private use of a company’s car by the employee is treated as a taxable supply of services by the employer. In cases where the employee pays no fee for using the company’s car for his/her private purposes, such a use should be considered as a free-of-charge supply of services by the employer, provided that the employer had the right to recover the entire input VAT incurred on the acquisition of goods and services connected with these services. Referring to section 4.2, if the taxpayer has the right to recover only a portion of input VAT incurred on the acquisition of a car, free-of-charge use by employees should not be subject to VAT. If the employee uses the company’s car for his/her private purposes in return for a fee paid to the employer, the employer is deemed to render a rental service to its employee. Additionally, the Polish VAT Law stipulates different methods for determining the taxable amount in case of the private use of the company’s car, depending on whether the employee pays any fee to the employer:
  • in the case of free-of-charge use of a company’s car, the taxable amount should be based on the costs of provision of this service borne by the taxpayer (employer)
  • in the case of use of a company’s car by the employee in return for a fee, the taxable amount should be equal to the amount due to the employer. Generally, if such a fee significantly differs from the market price, the tax authorities are allowed to establish it for tax purposes on the market level.

In practice, the fee for the use of a company’s car by the employee may be calculated as the number of kilometres driven for private purposes multiplied by a fixed rate depending on the engine size of the vehicle.

• Company cars – income taxes: If for private purposes, the value of this service is treated as a benefit in-kind, which the employee does not pay any fee to the employer for use of a company’s car constitutes his/her taxable income.
  Starting from January 1, 2015, the value of received benefit in-kind is fixed and amounts to:
  • 250 PLN monthly for the use of a car with engine capacity lower or equal to 1600cc;
  • 400 PLN monthly for the use of a car with engine capacity above 1600cc.

However, if the employee reimburses his employer for the private use of a company’s car and provided that the said reimbursement is determined in accordance with the arm’s length principle, no benefit in-kind is granted to the employee.

4.4. Income taxes – drivers’ personal taxation

• The vehicle costs made in respect of the private use of a vehicle are not deductible in the employee’s personal tax return.


• The car costs incurred with respect to commuting are not deductible for the employee’s personal income tax purposes.


• In the case when an employee uses his own car for a business trip and the employer refunds the costs of this usage, such a refund does not constitute a taxable income of the employee provided that it does not exceed the limit set for the number of business kilometres driven by an employee multiplied by maximum statutory rate per kilometre, as presented below:
  • Cars with engines up to 900cc: 0.5214 PLN/km
  • Cars with engines over 900cc: 0.8358 PLN/km

  
  At the same time, the employer may treat the above-mentioned refund as a tax deductible cost up to the limit described above.



• In the case when an employee uses his own car for local travel for business purposes and the employer refunds the costs of this usage, in principle, such a refund does not constitute a taxable income for the employee provided that it does not exceed the limit indicated above.

4.5. Electric vehicles

An important barrier to electric vehicle (EV) sales in Poland is the lack of  fiscal and tax incentives offered by the Polish government. In the upcoming years this situations will change with the new   Act on Electromobility and Alternative Fuels which entered into force on February 22, 2018. Tangible benefits for business owners, included in this act, still wait for the approval of the European Commission.

4.6. Future developments

In 2017 the number of new registered vehicles was the highest since the beginning of the present century and amounted to over 540,000 cars. This was possible due to Poland's good economic situation and significant economic growth. At the same time, however, it is not possible to overlook the positive impact of stable tax regulations on the sale of cars, in particular, in the scope of deduction of VAT related to the purchase and usage of company cars. Keeping the VAT deduction rules introduced in 2014 unchanged (allowing deduction of 50% tax for vehicles used for mixed purposes and 100% tax for sole business purposes) is an important incentive for entrepreneurs.
 In 2018, no changes in this matter will take place due to the fact that the current derogation decision issued by the Council of the European Union allows Poland to continue its current restrictions on tax deduction until the end of 2019. Regardless of the issue of VAT deduction from company cars, at the beginning of 2018 a number of other tax regulations essential for entrepreneurs entered into force. Subsequent changes will also be introduced during the current year.

4.7. Legal background (import taxes)

The beginning of 2018 brought many significant changes in the area of ​​corporate income tax (CIT) and personal income tax (PIT). They do not relate specifically to the automotive or fleet industry, however, due to their widespread application to all entrepreneurs, they must undoubtedly also be taken into account by this sector of the economy.

• CIT legislation (the CIT Law in particular):
  The Ministry of Finance recently prepared several changes in fiscal regulations that apply to taxpayers paying corporate income tax, or CIT. A complete novelty is the separation of two sources of revenue (income) in the CIT area. Until now, all revenues, regardless of their nature, have been accumulated, and the tax was paid on income based on the sum of revenues and the total costs of obtaining them. From the beginning of 2018, the legislator introduced, as a separate source of revenues, revenues earned from capital gains.
• VAT legislation (the VAT Law in particular)
  The goods and services tax (VAT) was introduced into Polish tax system in 1993. Regulations in the field of VAT have often been amended in order to harmonise Polish solutions relating to turnover taxes with the current European common system of value added tax. At present, the fundamental legal act in the scope of VAT is the Act of 11 March 2004 on the Goods and Services Tax (the VAT Act).
• Traffic Law
  The limits shown below apply unless otherwise stated.  As road signs may prescribe a lower or a higher speed limit . Different limits apply to cars towing trailers, trucks and buses.

- 50 km/h (31 mph) in built-up areas during the day (from 5 till 23)
- 60 km/h (37 mph) in built-up areas during the night (from 23 till 5)
- 90 km/h (56 mph) on single carriageways
- 100 km/h (62 mph) on dual carriageways or single carriageway expressways
- 120 km/h (75 mph) on dual carriageway expressways
- 140 km/h (87 mph) on motorways