Buying a car for for company, taxing

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tfwings
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Joined: Sat Sep 27, 2014 6:50 pm

Buying a car for for company, taxing

Post by tfwings » Sun Feb 15, 2015 5:28 pm

If you buy a car for your company, how does the taxing work? for example if you buy a car thats 10 000 euros, can you deduct a certain amount per year in a certain time (for example 5 years)? or how does it work.



Buying a car for for company, taxing

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betelgeuse
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Re: Buying a car for for company, taxing

Post by betelgeuse » Sun Feb 15, 2015 11:24 pm

tfwings wrote:If you buy a car for your company, how does the taxing work? for example if you buy a car thats 10 000 euros, can you deduct a certain amount per year in a certain time (for example 5 years)? or how does it work.
You can use the default depreciation rules or opt in for this model:

https://www.finlex.fi/fi/laki/ajantasa/ ... 0360#L3P33

"Ammattimaiseen liikenteeseen käytetyn auton hankintamenosta poistetaan verovelvollisen vaatiessa sinä verovuonna, jona auto on otettu käyttöön, enintään 25 prosenttia, kahtena seuraavana verovuotena enintään 20 prosenttia ja sen jälkeisinä verovuosina enintään 15 prosenttia."

betelgeuse
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Re: Buying a car for for company, taxing

Post by betelgeuse » Sun Feb 15, 2015 11:27 pm

betelgeuse wrote: "Ammattimaiseen liikenteeseen käytetyn auton hankintamenosta poistetaan verovelvollisen vaatiessa sinä verovuonna, jona auto on otettu käyttöön, enintään 25 prosenttia, kahtena seuraavana verovuotena enintään 20 prosenttia ja sen jälkeisinä verovuosina enintään 15 prosenttia."
Actually this might only apple to some vehicles like taxis.

FinnGuyHelsinki
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Re: Buying a car for for company, taxing

Post by FinnGuyHelsinki » Mon Feb 16, 2015 7:14 am

tfwings wrote:If you buy a car for your company, how does the taxing work? for example if you buy a car thats 10 000 euros, can you deduct a certain amount per year in a certain time (for example 5 years)? or how does it work.
In Finnish (couldn't find the same in English), but if you're running a company in Finland, or are about to, you will have be able to read Finnish or get a Finnish-speaking lawyer. http://www.vero.fi/fi-FI/Yritys_ja_yhte ... 2812849%29

In general, if you're running a company and have to ask about this, I'd suggest you to take a refresher course on company taxation, otherwise you'll surely be heading towards bankruptcy, if not prison.

Rosamunda
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Re: Buying a car for for company, taxing

Post by Rosamunda » Mon Feb 16, 2015 10:00 am

Technically speaking you can't buy a car for your company: the company buys its own car. This means your company needs to finance the purchase either through working capital or a loan.

You need to explore different options as it may be more tax efficient for the company to lease a car rather than buy one. Few companies buy fleet cars nowadays.

If you use the company car for your personal transportation, this has to be taken into account (it's a taxable benefit for you as an individual). Generally speaking, whether the car is owned by the company or whether you use your private car for doing business, you need to keep detailed records of every trip in a log book. If you buy your own private car, your business can pay you 0.43€/km as a tax-exempt allowance when you use the car for business purposes. https://www.vero.fi/en-US/Precise_infor ... nes(30408)

With regards to VAT, a business cannot recover VAT on the purchase or lease of non-commercial vehicles. So if you want to get the VAT refund then you need to get a brand new commercial vehicle: white van, or similar, ie a car with only front seats. Actually I'm not sure if depreciation rules are also restricted to commercial vehicles. It wouldn't surprise me if they are.

Depending on how many kilometres you do for your business, and why you need the car (transporting goods etc) it might just make more sense to buy yourself a cheap car and then get your company to pay you the tax-exempt allowance.

Upphew
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Re: Buying a car for for company, taxing

Post by Upphew » Tue Feb 17, 2015 10:39 am

Rosamunda wrote:Depending on how many kilometres you do for your business, and why you need the car (transporting goods etc) it might just make more sense to buy yourself a cheap car and then get your company to pay you the tax-exempt allowance.
Just remember that if you pass that cost to customer, it is not tax-exempt. Our friendly tax bear expects its 24%.
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betelgeuse
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Re: Buying a car for for company, taxing

Post by betelgeuse » Tue Feb 17, 2015 11:57 am

Upphew wrote:
Rosamunda wrote:Depending on how many kilometres you do for your business, and why you need the car (transporting goods etc) it might just make more sense to buy yourself a cheap car and then get your company to pay you the tax-exempt allowance.
Just remember that if you pass that cost to customer, it is not tax-exempt. Our friendly tax bear expects its 24%.
Value added tax also applies to company owned cars so I don't think it's relevant for a comparison.

Rosamunda
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Re: Buying a car for for company, taxing

Post by Rosamunda » Tue Feb 17, 2015 12:12 pm

Upphew wrote:
Rosamunda wrote:Depending on how many kilometres you do for your business, and why you need the car (transporting goods etc) it might just make more sense to buy yourself a cheap car and then get your company to pay you the tax-exempt allowance.
Just remember that if you pass that cost to customer, it is not tax-exempt. Our friendly tax bear expects its 24%.
Yes, everything you bill your customer is liable to VAT. But that is no problem for the business: VAT is recoverable for the business.

(The golden rule is that personal taxation and business taxation should be considered separately. Many people get confused because they fail to understand that their personal income and expenses are taxed separately to their business income and expenses. The tax rules for companies and for private individuals are different too.)

cors187
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Re: Buying a car for for company, taxing

Post by cors187 » Wed Feb 18, 2015 12:37 pm

You can buy an older work vehicle that has always been registered with a company(1 or many) since new , the vehicle was always VAT deducted, when your company picks up the vehicle you get the same. Not so with a VAT deduction vehicle that has been purchased privately at some point even though its a Legit work vehicle.

This is what i have been told.

dan_72
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Joined: Tue Dec 17, 2019 3:52 pm

Re: Buying a car for for company, taxing

Post by dan_72 » Tue Dec 17, 2019 3:59 pm

betelgeuse wrote:
Sun Feb 15, 2015 11:24 pm
tfwings wrote:If you buy a car for your company, how does the taxing work? for example if you buy a car thats 10 000 euros, can you deduct a certain amount per year in a certain time (for example 5 years)? or how does it work.
You can use the default depreciation rules or opt in for this model:

https://www.finlex.fi/fi/laki/ajantasa/ ... 0360#L3P33

"Ammattimaiseen liikenteeseen käytetyn auton hankintamenosta poistetaan verovelvollisen vaatiessa sinä verovuonna, jona auto on otettu käyttöön, enintään 25 prosenttia, kahtena seuraavana verovuotena enintään 20 prosenttia ja sen jälkeisinä verovuosina enintään 15 prosenttia."
Hi!

I recently bought the company car (I'm a single member LLC, Oy in Finland): when talking to tax office over the phone, the input I got is that, from a tax perspective, you can deduct 25% of the value the first year, the second year is 25% of "the total minus the 25% which you deducted first year", and so on ... so if the car was 40k€, first year you deduct 10k€, second year 7.5k€ and so on. This also matches with what a local accounting support company told me back in the beginning of 2019.

Another thing, but i'll make an own post for this, is whether or not it's effectively convenient to have a company car in case of single member LLC: I must say I have some doubts, especially as the personal benefit taxation doesn't drop any meaningful once the car becomes old, and you keep paying a lot of money per year even when it's 5 years or older.

Dan


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