Input VAT deduction on automobile fuel purchases in Poland
Technical update 2 minute read

Input VAT deduction on automobile fuel purchases in Poland

01 July 2015

From today (01.07.2015) taxpayers are be able to deduct 50% of the input VAT paid on the fuels purchased for both business and private purposes in Poland as the limitation on deductions of input with respect to fuel purchased expires.

We would add that this is a welcome change in the legislation.

Beginning 1 July 2015, taxpayers will be able to deduct 50% of the incurred input VAT on automobile fuel purchased for both business and private use. Under the explanations of the Polish Ministry of Finance, the right of VAT deduction shall be assessed in the light of provisions applicable at the time the tax point arises.

According to the MOF:

  • in case of fuel purchased until 30 June 2015, the current limitation of input VAT deduction will apply
  • the invoice date will be irrelevant in this case – i.e. the current limitation will apply to transactions performed before 1 July 2015 even if they will be documented by invoices issued after this date
  • the invoice date is not crucial to determine the right of VAT deduction, and the receipt of the invoice has an influence only the moment that the right to exercise the VAT deduction can be realised.

Why was this change needed? 

Fuel represents a significant proportion of expenditure for many businesses and reclaiming VAT on car fuel is an ideal way to recover some of these costs. 

However, it is also a risk. Often one of the first areas that a VAT inspector studies in the accounting records is whether the business and private journeys are recorded correctly or not. The problem is that companies do not always have the necessary documents to support their records. It is common practice among tax officers throughout the EU that when they audit business and private usage they compare the average consumption of the car, the volume of the fuel purchased and the mileage recorded. If there is any discrepancy it means the company has not complied with the administrative obligations and the VAT refund request will be rejected.  

In order to reclaim the VAT component of the fuel element, firms should take extra care and retain detailed record with VAT receipts to cover the amount of fuel that is deemed to be used in the business journey. 

Read more about how TMF Group's VAT services can help you do business in Poland.

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Written by

Dr. Robert Nagy

VAT Account Manager

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