Buying a Company Car: Is it Worth It?

Buying a car through your company is a decision that can bring significant tax and financial benefits. However, before making a final decision, it is important to understand all the advantages, limitations, and obligations that come with it.

Below is an overview of the key benefits of purchasing a vehicle through a company and the factors you should consider.

1. TAX INCENTIVES AND VAT DEDUCTION

One of the main reasons entrepreneurs and companies opt to buy a car through the business is the possibility of deducting VAT.

• Passenger vehicles – No right to deduct VAT, except for vehicles used in rent-a-car, taxi services, or driving schools.
• Cargo and specialized vehicles – VAT can be fully deducted, but only if the vehicle is used exclusively for business purposes and is registered as a cargo vehicle in the registration certificate.

If the vehicle is also used privately, the right to deduct VAT is limited.

2. DEPRECIATION AND REDUCTION OF TAX BASE

A company car is recorded as a fixed asset and subject to depreciation. This means that the acquisition cost is spread over several years, which reduces the company’s taxable income.

• Depreciation rate – Around 10% annually for passenger vehicles and 15% annually for cargo vehicles.
• Additional benefits – Fuel, service, registration, and insurance costs are recorded as expenses, further reducing the tax base.

3. REDUCTION OF OPERATING COSTS

Vehicle-related costs (registration, insurance, technical inspection, repairs) can be recorded as business expenses. This directly reduces the company’s corporate tax liability.

4. FLEXIBLE FINANCING OPTIONS – LEASING

Leasing is a popular model for financing cars for companies:

• Operating lease – The company rents the vehicle and pays monthly installments. At the end of the contract, the vehicle is either returned or purchased at residual value.
• Financial lease – The vehicle is recorded as a company asset and, after all installments are paid, becomes the company’s property.

Leasing provides flexibility and reduces upfront acquisition costs.

5. ENHANCEMENT OF PROFESSIONAL IMAGE

For companies that work with clients, a company car can mean much more than just transportation – it builds trust and strengthens the professional image.

Buying a company car can be a very worthwhile decision, provided it is used in accordance with the law and properly planned.

Key advantages include:

• Tax incentives
• Deduction of business expenses
• Flexible financing options
• Strengthening the company’s professional image

However, it is important to pay attention to tax regulations, long-term obligations, and administrative procedures.

If you are considering buying a car for your company and want professional advice, Perfectum is here to support you – from tax consulting to administrative assistance. Contact us and make the best decision for your business!