When buying a car for a company, a big role is played by who sells it - an individual or a company.
If the car is purchased from a legal entity
, then value added tax is added to the price, which the buyer (company) can write off in whole or in part. In addition, many car dealers offer warranties. This provides additional protection if deficiencies are identified.
If the car is sold by a private person
, then the VAT is not added, therefore, with the same final price, it is more profitable for a company to buy a car from a legal entity.
As a result of changes in Estonian legislation effective January 1, 2018, entrepreneurs have two options to choose from:
- use of the vehicle for commercial purposes only.
This option prohibits personal use of the company machine. In this case, the entrepreneur makes a corresponding note in the Road Administration, and the company maintains a mandatory record and control over the use of the car. In this case, there is no obligation to pay taxes from a special benefit
. It is allowed to deduct 100% of the included sales tax from the expenses and from the purchase price of the vehicle.
- personal trips are also carried out on a car belonging to the company.
In this case, you do not need to make a mark with the Road Administration. There is no obligation to keep a travel diary, but there is a duty to tax with a special benefit. Only 50% of the included value added tax is allowed to be deducted from the costs and the purchase price of the vehicle.
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