Disputes over VAT deduction for cars in municipalities: Current issues in public administration

• Local governments can deduct 50% of VAT from expenses on cars used for mixed activities
• Tax authorities still believe in applying double restrictions on VAT deduction
• The issue of VAT deduction for public finance sector entities is being resolved in favor of these entities by administrative courts
• There is hope that the Supreme Administrative Court will uphold the favorable rulings for taxpayers
• A breakthrough ruling in Warsaw allowed a public finance sector entity to deduct VAT without the additional 50% restriction
• The entity had to prove that the cars were used for business and statutory purposes only
• Tax authorities argued for the application of both the pre-coefficient and 50% deduction restrictions
• The issue of private use of cars by employees was also raised by tax authorities

Source: prawo.pl

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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