Buying a company vehicle can be a great step that brings advantages to your business. However, if you’re not sure how to proceed with registering the vehicle in your limited liability company (s.r.o.), this article provides a clear guide.
Why buy a vehicle for your s.r.o.?
Purchasing a company vehicle has several benefits:
- Tax savings: Operating costs of the vehicle (fuel, maintenance, insurance) can be claimed as business expenses, reducing the taxable base.
- VAT deduction: If the vehicle is used for business purposes, you can claim a VAT deduction (if you are a VAT payer).
- Better expense control: A company vehicle provides clear records of the costs associated with its use.
The process of buying a vehicle for your s.r.o.
1. Choosing the vehicle
First, choose a vehicle that will suit the needs of your business. It’s important that the car is used for business purposes, as this affects tax benefits.
2. Purchase and invoicing
Once you’ve decided to buy the vehicle, make sure that the invoice is issued in the name of your s.r.o. The invoice should contain all necessary details, including the company’s identification and VAT numbers.
3. Registering the vehicle in the s.r.o.
After the purchase, the vehicle must be registered in your company’s name in the vehicle register. For registration, you will need:
- The purchase contract or invoice made out to the s.r.o.
- The vehicle’s registration certificate.
- An extract from the commercial register confirming the existence of the company.
- An insurance contract (compulsory liability insurance).
After successful registration, you will receive a new vehicle registration certificate, where your company will be listed as the owner.
Tax and accounting aspects
a) Depreciation
Depreciation is the process where the value of the vehicle is gradually divided over several years and claimed as a tax-deductible expense. For vehicles, this usually takes 4 years with straight-line depreciation. For example, if you buy a vehicle for €20,000, the annual depreciation will be €5,000, which means you can deduct this amount each year from your taxable base.
Depreciation accounts for the wear and tear and the decreasing value of the vehicle over time.
b) Accounting for expenses
Costs associated with operating the vehicle, such as fuel, repairs, and insurance, are tax-deductible. However, you must keep accurate records of the vehicle’s business use to prove that it was used for company purposes.
c) Road tax
Don’t forget that if you use the vehicle for business purposes, you are required to pay road tax. This varies depending on the type and weight of the vehicle.
Buying a car on lease – How does it work?
If you don’t want to pay the full amount for the vehicle upfront, you can opt for leasing, a financing method where the leasing company buys the vehicle and you pay for it in installments.
There are two main types of leasing:
- Financial leasing: The leasing company buys the vehicle, and you pay for it in regular monthly installments. At the end of the lease term, you have the option to purchase the vehicle for a symbolic residual value. During the entire lease period, the vehicle is owned by the leasing company, but the leasing costs are tax-deductible for your company.
- Operating leasing: This type of lease does not offer the option to purchase the vehicle at the end of the contract. Once the lease term ends, the vehicle is returned to the leasing company. Operating leasing typically includes maintenance and servicing, so you have fewer concerns about repairs. In this case, the monthly payments are also tax-deductible.
Buying and registering a vehicle for your s.r.o. provides significant benefits to business owners, such as tax savings and better control of company expenses. Whether you choose to purchase the vehicle outright or lease it, it’s important to understand all the legal and accounting aspects of this process. If you’re unsure, don’t hesitate to contact an expert or accountant who can guide you.