Selling a company car involves tax obligations under VAT and PIT. Find out how to correctly settle the transaction and avoid costly mistakes.
Selling a company car is one of those moments when a business owner must simultaneously deal with VAT regulations, PIT rules and the principles governing the correction of previously deducted tax. Whether you run a sole proprietorship or a sp. z o.o., each legal form operates under slightly different rules. In this article we explain step by step how to correctly settle the sale of a company car, when it pays to first withdraw it to private assets, and what to watch out for to avoid falling into arrears with the tax office (US).
If you deducted VAT on the purchase of a car — in full or at 50% — the sale of that vehicle is, as a rule, subject to VAT. The standard rate is 23%. The tax obligation arises at the moment the car is handed over to the buyer or a VAT invoice is issued, whichever comes first. An exception applies when no right to deduct VAT existed at the time of purchase — in that case the sale may benefit from the exemption under Article 43(1)(2) of the VAT Act. This applies, for example, to cars purchased from private individuals under a private purchase agreement without a VAT invoice. Please note: the sale of a company passenger car requires the issuance of a VAT invoice, and the transaction must be recorded in the JPK_V7 register.
If you deducted 50% of the VAT on the purchase of a passenger car used for mixed purposes (business and private) and you sell it before the expiry of 60 months from its acquisition, you are required to make a correction of the input tax. The correction works in both directions: • If you sell the car subject to VAT — you may deduct the remaining portion of the undeducted tax (so-called upward correction, korekta in plus). • If you sell the car VAT-exempt — you must repay part of the tax previously deducted (downward correction, korekta in minus). The correction period is: • 12 months — for vehicles with an initial value not exceeding PLN 15,000. • 60 months — for other passenger vehicles. • 60 months — for vehicles with full VAT deduction (100%), e.g. commercial vehicles or those registered under VAT-26. The correction is made in the JPK_V7 return for the period in which the sale took place.
Income from the sale of a company car constitutes income from business activity and is subject to taxation under the form chosen by the entrepreneur — the tax scale, flat-rate income tax (podatek liniowy) or lump-sum tax (ryczałt). The income is the sale price stated in the agreement or invoice. The tax-deductible cost is the undepreciated value of the car (the difference between the initial value and the total depreciation write-offs made). An important rule: if the car was depreciated and you included the write-offs as costs, the income from the sale increases the tax base. You cannot simply "zero out" the income. In the case of a sp. z o.o., the transaction affects the CIT tax base and must be reflected in the new JPK_CIT structure, which is mandatory from 2026.
Many business owners consider withdrawing a car from the business to their private assets before selling it. This strategy can be advantageous, but it requires careful planning. When withdrawing a car from a sole proprietorship (JDG) to personal assets: • This action is not subject to PIT at the moment of transfer — you will pay tax only upon sale, if it takes place before the expiry of 6 years from the first day of the month following the month of withdrawal. • However, the withdrawal may trigger a VAT correction obligation (analogously to a VAT-exempt sale). In the case of a sp. z o.o., the withdrawal of a car to a shareholder's private assets is treated as a gratuitous benefit — the company may generate CIT-taxable income, and the shareholder may be subject to PIT. It is always advisable to consult your accountant before making this decision.
Correctly settling the sale of a company car requires complete documentation: 1. VAT invoice or purchase agreement — depending on the VAT status of both parties. 2. Removal of the vehicle from the fixed asset register, together with an LT document (fixed asset liquidation) or OT/PT. 3. Calculation of the VAT correction and its inclusion in the JPK_V7 return for the relevant period. 4. Update of the vehicle mileage log, if the car was covered by VAT-26. 5. Appropriate entry in the revenue and expense ledger (JPK_PKPIR, KPiR) or the company's accounting books. The absence of any of these elements may result in the settlement being challenged during a tax audit. Pay particular attention to the consistency of figures between the fixed asset register and the VAT return.
The practice of accounting firms shows that business owners most commonly make the following mistakes: • Failure to make a VAT correction — particularly when selling a car within the first 5 years of purchase. • Understating income — e.g. by selling below market value to a related person. The tax office (US) may challenge the price and assess additional income. • Failure to include the transaction in JPK_V7 — even if the sale benefits from a VAT exemption, it must be reported in the register as an exempt supply. • Confusion over the correction period — applying the 12-month period where the 60-month period applies. • Failure to update the third-party liability (OC) and comprehensive (AC) insurance policy and to deregister the vehicle from the business in CEIDG or KRS.
Selling a company car is a multi-step process that requires simultaneous attention to VAT, PIT and proper documentation. Mistakes in this area can cost significantly more than the saving you were trying to achieve. If you are planning to sell a car from your business or are considering withdrawing it to private assets beforehand, contact us — Danexis sp. z o.o. in Wrocław helps business owners settle such transactions without stress and without costly errors. Call us at +48 780 760 666 or write to kontakt@danexis.pl.