End of leasing – what next? One of the possible options is to buy a leased car for the amount indicated in the contract, which is always lower than the initial amount. In 2024, we can choose between a private buyout and a corporate buyout. What are the differences between different types of buyouts and which is more profitable?

Purchase of a car from lease to a private person 2024

If the lessor offers a private purchase, you can easily use this option and buy a car previously used for business purposes for personal purposes.

The most important information:

  • Purchase of a car from a lease to a private person and VAT - in such a case, VAT cannot, as a rule, be deducted from the purchase price of the car. However, if the car will be used for both private and business purposes (related to business activity), you can deduct 50% VAT from the operating costs of this vehicle, such as fuel or service.
  • Leasing purchase for a private person and costs - costs related to such a purchase cannot be included in tax-deductible costs, unless such a car is to be used for both private and business purposes: then only 20% of the value of the expenses incurred can be included in the costs.
  • Purchase for a private person and sale - a car purchased from leasing for private purposes can be sold tax-free only after 6 years (until 2022, it was enough to wait 6 months).

Donating a purchased car

Regulations introduced as part of the New Deal make it possible to purchase a lease from a private person and then give the car as a gift to the person zero tax group, which includes spouses, descendants (children, grandchildren), ascendants (parents, grandparents), siblings, stepchildren, stepfather and stepmother. Such a person can sell the donated car after 6 months and not pay income tax and inheritance and donation tax. A car donated as a gift can also be used in business activities under a loan agreement, which allows the value of the expenses incurred to be included in the 75% costs.

Purchase of a leased car as part of a business activity 2024

A leased car can also be used as part of your business. It is worth remembering that the method of purchase has a significant impact on issues related to VAT deduction and the inclusion of the vehicle in... company costs or subsequent sale.

The most important information:

  • Purchase of a company leased car and VAT - if the car is intended for private and business purposes, you can deduct 50% VAT, while you can deduct 100% VAT if the vehicle is used exclusively as part of your business. In order to deduct 100% VAT, you must also meet additional requirements: use the vehicle only for business-related purposes, keep a mileage record for VAT purposes, report the vehicle on the VAT-26 form and create regulations for the use of the vehicle in the company.
  • Leasing purchase for a company and costs - the entrepreneur has two options to choose from: he can enter the car into the register of fixed assets and depreciate it, or he can include the car in costs once in the month of putting it into use. The latter option can only be used if the redemption value does not exceed PLN 10,000 net for VAT taxpayers/gross for VAT-exempt taxpayers.
  • Company purchase and sale - the sale of a company vehicle is a paid supply of goods, which is subject to taxation at the 23% rate. The entrepreneur may be entitled to deduct the remaining VAT amount from the redemption invoice by way of input tax correction: for motor vehicles with an initial value of up to PLN 15,000, the correction period is 12 months.

Purchase of a leased car – accounting

Do you want to lease a car for an individual or company? You don't know what is more profitable and you need a tax recommendation? Contact us – at Open Profit we provide professional services online accounting services for entrepreneurs running sole proprietorships, B2B people and small companies. We will check whether purchasing a leased car may be an expense, we will verify issues related to VAT deduction and answer your questions. If you are considering buying out of leasing and want to stay up to date with current regulations, we invite you to cooperate!

FAQ – frequently asked questions and answers

What is the difference between operational leasing and financial leasing?

There are two types of leasing:

  • Operating lease – after the end of the contract, it is possible to buy the leased car as part of the business or for private purposes. During the term of the contract, the car is in the lessor's fixed assets.
  • financial leasing – ownership automatically passes to the lessee upon signing the contract, because at the moment of its conclusion, the car constitutes a fixed asset of the lessee.

Is buying a leased car an expense?

It depends on the type of lease buyout. The costs related to the purchase for a private person will not be included in tax-deductible costs (unless the vehicle is also to be used for business purposes, then the value of the incurred expenses can be included in 20%). In the case of purchase for a company, the entrepreneur may enter the car in the register of fixed assets or include it in the costs.