Vehicle purchase limit for companies – which additional expenses may affect it

When companies purchase vehicles, the threshold for the value of a representative car is important - 75,000 euros excluding VAT. If the value of the vehicle exceeds this threshold, the company is not entitled to deduct VAT on the purchase and maintenance of the vehicle, and the costs related to the car cannot be attributed to business expenses.

Therefore, in practice, the question often arises as to what expenses should be included in the purchase price of a vehicle in cases where additional equipment is installed or improvements are made to the vehicle within 12 months of its purchase.

SRS opinion

The SRS believes that virtually any additional equipment or improvement costs incurred within 12 months of the vehicle's purchase can be added to the vehicle's purchase value. This means that even relatively small additional expenses can increase the vehicle's value above the €75,000 threshold, resulting in the application of the representative car tax restrictions.

Court opinion

Case law shows that such issues should be assessed on their merits, analyzing the nature of the specific expenses. For example:

1) The court noted that the purchase and installation of an anti-theft system is not directly necessary for the operation of the vehicle, as the car can be used without it, especially if it already has a factory-installed alarm or immobilizer. However, the court also recognized that the installation of an anti-theft system can be considered a significant improvement to the vehicle. Such a system increases the safety of the vehicle, reduces the risk of theft and can potentially affect the value of the vehicle. Since such systems are usually installed for long-term use, their cost can be taken into account when determining the value of the vehicle.

The SRS did not consider that the dismantling of additional equipment and the clarification of the VAT declaration should be taken into account, indicating that such actions were taken to avoid tax liabilities. However, the court disagreed with this opinion and recognized that the company has the right to adjust the submitted reports if there is uncertainty about whether specific costs should be included in the purchase value of the vehicle.

2) In the case of the rental of an anti-theft system, however, the court adopted a different approach. It was concluded that in such a situation the company essentially receives a security service, the purpose of which is to reduce the risk of theft and ensure the vehicle is found in the event of theft. Therefore, such a service is not considered a technical improvement of the vehicle that would increase its value. In this case too, initially, following objections from the SRS, the company cancelled the invoice for the rental of the security system and corrected the VAT declaration. However, the SRS maintained its opinion, indicating that a new invoice for the same amount was later issued to the owner of the company as a natural person.

3) Formally assessing the regulation, even the purchase of winter tires for a vehicle whose value is close to the threshold could theoretically lead to the conclusion that the vehicle becomes a representative car.

Conclusion

These cases show that there are different interpretations of regulatory rules, which in practice lead to disputes with the SRS. Although court rulings provide some clarity, the issue of the impact of security system rental costs on the value of the vehicle is still not finally resolved, as the SRS has filed a complaint against the regional court ruling, which will be reviewed by the Senate. Therefore, companies purchasing a vehicle close to the value limit are advised to carefully evaluate any additional equipment installation or use of services.