The use of a company car is possible for business and personal purposes. However, different conditions apply to accounting for expenses for tax purposes. More on this further.

A company can own and use a car under the terms of a fixed asset, leasing or rental. Regardless of these conditions, a company’s car can be used for official and mixed purposes: official and personal.

The conditions for accounting for expenses related to the operation of a car for tax purposes with corporate income tax (CIT) and value added tax (VAT), including expenses for repairs, spare parts, and fuel, differ.

If the car is used only for business purposes, then the company submits VAT-26 form to apply a 100% VAT deduction on related expenses. Accepted documents for using a car for official purposes are observed, mileage, routes and meter readings are taken into account. In this case, expenses applied to CIT taxation are also taken into account at a rate of 100%.

If the car is used for mixed business and personal purposes, then the costs associated with the operation of the car can be taken at the rate of 75% for CIT purposes. Expenses are deductible for VAT purposes at a rate of 50%. This does not require additional documentation or submission of the VAT-26 form.