Driver's finances › VAT on a car

VAT when buying a car — invoice, margin, deduction

How you buy the car determines the tax more than its price does. Three scenarios differ fundamentally.

Three purchase scenarios

• A 23% VAT invoice — from a company/dealer. As a VAT payer you deduct 50% (mixed use) or 100% (business-only: VAT‑26 + a mileage log).
• A VAT-margin invoice — the dealer pays VAT only on its margin. The price may be lower, but you deduct no VAT at all. For a non-VAT payer that is often better; a VAT payer should run both numbers.
• A contract with a private person — no VAT; instead you pay 2% PCC within 14 days. Compute it in the PCC calculator.

A car from abroad

Importing from the EU from a private person or under VAT-margin — you pay no Polish VAT (you pay excise). 23% VAT appears when buying from a foreign company on a net invoice (intra-EU acquisition) and for cars that are new within the meaning of the VAT Act. Business deduction rules are then the same: 50/100%.

The most common mistake

A VAT-registered buyer choosing VAT-margin „because it's cheaper” and then discovering there is nothing to deduct. Before picking an offer, compare the net price of a 23% invoice (after deduction) with the gross margin price. More on business accounting: a car in the business.

FAQ

How does a VAT invoice differ from VAT-margin on a car?
With a 23% VAT invoice a VAT payer deducts 50% or 100% of the tax. Under VAT-margin the seller pays VAT only on its margin and the buyer deducts nothing — the price may be lower, but with no right to deduct.

I am buying from a private person — do I pay VAT?
No. Instead of VAT you pay the 2% PCC tax on the car's market value, within 14 days of the contract (the PCC-3 form).

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