With the deduction on company cars the state allows companies to recover theVAT paid at the time of their purchase. The companies they can in fact deduct VAT on the rental and purchase of company cars, including i management costs, requesting this tax relief through the tax declaration from professional or business activities.
But in Italy there is a problem: compared to other countries, here it is possible to retrieve / download only the 40% VAT and not the 100% as required by the European directive. Absurd.
100% and partial company car VAT deduction only in Italy
There European Directive of 2006 establishes that companies can recover the 100% VAT paid at the time of purchase or rental but Italy every year, since 2008, requires a derogation to apply the 40% threshold, thus to the detriment of companies that find themselves a fictitious profit on which they then also pay taxes. In short, in addition to the damage also insult. The European Council with the Implementing Decision 2019/2138 he had extended for Italy until 31 December 2022 a limited deduction of VAT on purchases and imports of cars that are not part of his business as an instrumental good.
Three-year extension of the VAT deduction at 40% instead of 100%
As regards 2022, the derogation that companies do not like could be requested again: according to rumors the Ministry of Economy he would have worked on the umpteenth request that could also be submitted after 31 March.
To date, therefore, in Italy the maximum limit for VAT deductions is set at 40%, estimated percentage for using the vehicle for income generation purposes. This reduction in the deduction percentage has always been requested by the Italian Government and granted by the EU through repeated three-year extensions, which negThe last 15 years have always followed one another.
The last extension, in chronological order, expires the next December 31, 2022 date until which the deduction is reduced from 100% to 40%, but the Executive would theoretically have had until 1 April to be able to request it from the EU Commission. In the hope that there are no further extensions, the Companies will finally be able to deduct the 100% VAT as happens in rest of Europe from 1 January 2023.
In the event of a new extension, the companies will instead be forced to deduct the VAT on the purchase only for the 40%.
Company car deduction 40% VAT 100%, how it works
But not all private workers deduct VAT on company assets in the same way.
For craftsmen And professionals for example, the deduction of the expected VAT is al 40% for a single vehicle, or a car for each member in the case of activities set up in association forms. The deduction also includes the maintenance costs, such as fuel costs or car maintenance costs.
For theinstrumental use of the car, as is the case, for example, for the trucksthe VAT deduction rises to 100%.
Sales agents and representatives already now they can deduct 100% of the VAT. Company cars for non-exclusive instrumental use can take advantage of a VAT deduction of 40%, benefiting from thediscount on the rental fee o purchase and maintenance costs.
Company cars for exclusive instrumental use benefit from the 100% VAT deduction. These are for example used vehicles from taxi drivers and NCCfrom driving schools, or company cars long-term leases for a use entirely related to the business activity.
Tax breaks on company cars
Company cars also enjoy a number of tax breakswhich also include a number of deductionsor the possibility of reducing the base and which apply for the purchase and rental of company vehicles for professional use.
The tax breaks on company cars are:
- Craftsmen and professionals: it is possible to deduct 20% of the expenses incurred for the purchase, leasing or rental of the used car for work and personal mobility needs. For the purchase the limit is set at 18,075.99 euros, while for the rental the maximum amount is 3,615.20 euros.
- Sales agents and representatives: the deduction reaches 80%, with maximum thresholds of € 25,822.84 for the purchase and € 5,164.57 for the rental.
- Company car for non-exclusive instrumental use: the deductibility of the car for mixed use, or used not exclusively for work, is equal to 20% of the costs incurred by the company.
- Company car for exclusive instrumental use: in this circumstance it is possible to take advantage of a deductibility of 100% of the company car, without maximum limits.
In the cases listed, the maintenance costs of the company vehicle (fuel, repairs, maintenance) do not apply deductibility limits.
Fringe Benefit Company Cars, How It Works
On company cars, the so-called fringe benefit, on vehicles used ad mixed usewhich can also be used by professionals in theirs private life.
Also in this case it is possible to take advantage of tax breaks, both by companies and by professionals and artisans with a VAT number. The VAT deduction is 40% if the benefit is charged in paycheck to the employee, otherwise for invoices subject to VAT, the deduction rises to 100%.
Furthermore, it is possible to deduct the costs of the car to the extent of 70%. These tax benefits are applicable both in the case of the purchase of the company car for mixed use granted to the employeeboth for the long-term rental of the vehicle.
In 2022, however, the threshold of exemption from payment of taxes, after the increase offered in the two-year period 2020/2021.
In particular, the exemption limit for 2022 is 258.23 euros, therefore up to this value the taxes on the earned income are not applied. The excess amount is instead taxed, according to the thresholds established by CO2 emissions:
- 20% for CO2 emissions below 60 g / km;
- 30% for CO2 emissions from 60 to 160 g / km;
- 50% for CO2 emissions from 160 to 190 g / km;
- 60% for CO2 emissions above 190 g / km
“The next 1 April could mark a historic moment for the mobility of Italian companies, after 15 years of continuous derogation. A more correct tax regime aligned with other EU countries – declares Alberto VianoPresident of ANIASA – it would provide a significant boost to the diffusion and renewal of company fleets, with beneficial effects for companies (lower costs), the environment (reduction in the average age of vehicles in circulation and related emissions) and the tax authorities themselves.
In addition to the higher revenues linked to the growth in registrations, it should in fact be remembered that the sector plays a role of promoter both of fiscal correctness and of contrasting tax evasion: each operational phase is traced from an administrative and accounting point of view. A further postponement would constitute the confirmation of an orientation that is unfortunately harmful for Italian companies ”.
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