VAT deduction for company cars in Poland: when mileage records may no longer protect your business

A company may deduct 100% VAT on a passenger car in Poland only when the vehicle is used exclusively for VAT-taxable business activity and the company can prove and control that use. Timely VAT-26 filing and mileage records are not sufficient if actual routes indicate private use. Polish tax authorities may compare company documentation with automatic number plate recognition data, including ANPRS. Discrepancies may reduce the deduction to 50%, trigger tax arrears and interest, and create fiscal penal risk.

When is a 100% VAT deduction available?

The standard rule for passenger cars is a 50% VAT deduction on leasing, fuel, servicing and other operating expenses. Full deduction requires the company to demonstrate exclusive business use.

The company must:

• file the VAT-26 form,
• maintain current records of routes, trip purposes and odometer readings,
• enforce rules that exclude private use.

A written policy alone does not protect the deduction. Parking arrangements, access to keys, authorised users and route control are also relevant.

How does ANPRS increase tax risk in Poland?

Automatic number plate recognition systems can identify the place and time of a vehicle’s journey. The Polish tax administration may compare this information with the taxpayer’s mileage records.

The tax office may request explanations if the vehicle is recorded on a different route, appears at a tourist destination during a weekend or is regularly parked at an employee’s or management board member’s home.

A missing entry for a journey visible in external data may also undermine the reliability of the entire record-keeping process.

Does one private journey remove the full deduction?

Even a single private trip may show that the vehicle was not used exclusively for business. However, it does not automatically mean that all VAT settlements for several years must be corrected.

The correction depends on the circumstances, available evidence and whether the company can establish when the vehicle’s use changed. If private journeys are permitted, the mixed-use model and a 50% VAT deduction may be safer.

What are the VAT-26 deadlines?

VAT-26 must be filed by the 25th day of the month following the month in which the first vehicle-related expense was incurred, but no later than the date on which the VAT records are submitted. A change in use must be reported by the end of the month in which it occurred.

Late filing means that exclusive business use is recognised only from the first day of the month in which the form was submitted.

What should investors and companies in Poland review?

Businesses claiming a 100% deduction should verify the VAT-26 filing date, completeness of mileage records, consistency with calendars and assignments, parking rules, key custody and authorised access.

If the deduction is challenged, the company may have to repay the difference between the 100% and 50% deduction, together with interest, and reconstruct documentation covering a longer period. For investors operating fleets, leased cars or high-value vehicles, the impact on a business in Poland can be material.

Read the full article here: VAT deduction for company cars in Poland: when mileage records may no longer protect your business.