A car is in any company, regardless of its size, it's basically a necessity. On the other hand, the purchase of a company car is often too expensive, especially for young entrepreneurs. In such a situation it may be a good idea to rent cars. How should all formalities be completed and how can the costs associated with such a vehicle be settled?
Car rental - what and how?
The entrepreneur can rent a vehicle on the basis of a rental contract in accordance with article 659 of the German Civil Code. 1 of the Civil Code. As it results from this provision, through a lease agreement the lessor is obliged to hand over the goods to the lessee for use for a definite or indefinite period of time, and the lessee is obliged to pay the lessor the rent agreed upon in advance.
Vehicle hire and costs
An entrepreneur who rents a car is not only obliged to pay regular rent. He also incurs other expenses which are related to the normal operation of the car. These include fuel purchases, oil changes, motorway tolls, parking fees, accident repairs, repairs, purchase of parts or car insurance. In order to include these expenses as tax deductible costs, it is necessary to keep appropriate records of the vehicle's mileage, i.e. the popular kilometre. At the same time, the sum of expenses included in the costs cannot exceed the amount of the limit, which results from multiplying the number of kilometers of the real car mileage and the rate for one kilometer of this mileage.
This rate depends on the cylinder capacity of the vehicle's engine and is 0.5214 PLN for cars with a cylinder capacity up to 900cm3 and 0.8358 PLN for vehicles with a cylinder capacity higher than 900cm3.
Car rental and rent and insurance
Although the vast majority of the costs associated with a rented vehicle should be booked according to this principle, there are also other cases.
The first one concerns the issue of car insurance - AC, OC and NW. Expenses incurred under insurance of a rented car (NW, AC and OC) may be classified as tax deductible costs if such an obligation is specified in the rental agreement itself. It is therefore necessary in such a situation to provide that all costs related to vehicle insurance are borne by the taxpayer, the lessee, and not the person renting the vehicle. However, the Act also contains a provision which effectively limits the amount of expenditures incurred in this respect. For example, third party liability insurance expenses are deductible in full if the mileage limit is not exceeded in that period.
As far as the accounting of the fee, i.e. the rent for a car, is concerned, the tax authorities have a different opinion in this case. In some opinions, for example, one can find information that the rent for car hire is not a service charge and should therefore not be accounted for within the kilometre limit, but for it. However, many people do not agree with this approach. In their opinion, the rental fee is related to the car and should therefore also be included in the popular kilometre.
Interestingly, in 2013 the Minister of Finance issued a general interpretation of the regulations, in which he presented a position favourable for all taxpayers, which states that rent should be settled directly in tax deductible costs. So the problem has been solved, but still cut many people with such a view disagrees.