How to Account for a Car in Your Business — A Complete 2026 Guide

A car is one of the most commonly used business assets. How you account for it has a significant impact on both your income tax and VAT. Poland's rules are complex and vary depending on whether the car is private, company-owned, or leased — and even on the type of engine. This guide lays out all the options.

Private Car Used for Business

If you do not want to or cannot add a car to your business assets, you can still deduct costs of using your private vehicle for business purposes.

The 20% Flat Deduction

Since 2019, a simplified method applies: 20% of expenses related to vehicle use (fuel, insurance, repairs, car wash, parking fees) can be claimed as a tax-deductible cost.

This means that if you spent 1,500 PLN on the car in a given month, only 300 PLN goes into your business costs. Simple, but not very favourable.

Mileage Log (Kilometrowka)

The alternative is keeping a mileage log where you record every business trip (date, route, purpose, kilometres driven). The deductible cost is calculated by multiplying kilometres by the official rate:

  • Cars with engine capacity up to 900 cc: 0.89 PLN/km
  • Cars with engine capacity above 900 cc: 1.15 PLN/km

A mileage log is more time-consuming, but with heavy business use it can be more beneficial than the 20% flat deduction.

VAT on a Private Car

When using a private car for business, you can deduct 50% of VAT on running expenses (fuel, servicing, parts). You cannot deduct VAT on the purchase of the vehicle itself, as it is not a business fixed asset.

Company Car — Fixed Asset

Adding a car to your business fixed assets register gives you much greater tax optimisation opportunities.

Depreciation — 2026 Limits

Depreciation write-offs are tax-deductible costs, but the law sets limits on the initial value up to which depreciation qualifies:

| Vehicle type | Initial value limit | |-------------|-------------------| | Electric vehicle (EV) | 225,000 PLN | | Plug-in hybrid | 150,000 PLN | | Combustion engine | 150,000 PLN |

If you buy a combustion car for 200,000 PLN net, depreciation above the 150,000 PLN limit is not tax-deductible. The deductible proportion is 150,000 / 200,000 = 75%, so you include 75% of each depreciation write-off in your costs.

Depreciation Methods

  • Straight-line — standard rate of 20% per year, meaning full depreciation over 5 years
  • Individual — for used cars (at least 6 months old before being added to the business), rates up to 40% per year, depreciation in 2.5 years
  • One-off — for small taxpayers and businesses in their first year, up to a limit of 50,000 EUR (still subject to initial value limits)

Full Deduction of Running Costs

A company car used exclusively for business purposes allows you to include 100% of running expenses as tax-deductible costs. Requirements:

  • Keeping a mileage log (GPS or manual)
  • Reporting the vehicle to the tax office on form VAT-26
  • Establishing internal vehicle use regulations
  • The vehicle must not be made available to employees for private use

If the company car is also used privately (mixed use), you can include 75% of running expenses in your costs.

VAT Deduction on Cars

50% VAT — Mixed Use

By default, for passenger cars you can deduct 50% of VAT on:

  • Vehicle purchase
  • Lease instalments
  • Fuel
  • Repairs and servicing
  • Insurance (where VAT applies, e.g., roadside assistance)
  • Accessories and equipment

100% VAT — Exclusively for Business

Full VAT deduction requires meeting three conditions simultaneously:

  1. Mileage log — a detailed record of every trip
  2. Usage regulations — an internal document setting out vehicle use rules
  3. VAT-26 declaration — vehicle information submitted to the tax office by the 25th of the month following the month in which the first VAT expense was incurred

Losing the right to full deduction (e.g., one-off private use) means you must correct the VAT for the entire period.

Leasing — Operational vs Financial

Leasing is the most popular form of car financing for businesses in Poland. Two forms exist.

Operational Leasing

  • Instalments — the entire instalment (principal + interest) is a tax-deductible cost
  • VAT — deduct 50% or 100% of VAT on each instalment (depending on usage)
  • Limit — total deductible instalments cannot exceed the limit: 150,000 PLN (combustion/hybrid) or 225,000 PLN (EV), in proportion to the vehicle's value
  • Buyout — at the end of the contract you can purchase the vehicle at the residual price (often a few percent of value)
  • Ownership — the leasing company owns the vehicle during the lease
  • Minimum term — 24 months

Financial Leasing

  • Instalments — only the interest portion is a cost; the principal portion is a liability repayment
  • Depreciation — the vehicle is your fixed asset from the start; you depreciate it under the same rules as a purchased car
  • VAT — you deduct the full VAT on the vehicle's value upfront (50% or 100%), then VAT on interest instalments
  • Depreciation limit — the same limits as for purchases (150,000/225,000 PLN)
  • Ownership — you are the economic owner from the beginning

Which to Choose?

| Criterion | Operational leasing | Financial leasing | |-----------|-------------------|-------------------| | Simpler accounting | Yes | No | | Better for frequent car changes | Yes | No | | Lower upfront VAT | Yes | No | | Vehicle as your asset | No | Yes | | Better for expensive cars | No | Yes (depreciation) |

Company Car for Employee's Private Use

If you provide a company car to an employee for private use, a benefit-in-kind arises that must be added to their employment income:

  • Electric and plug-in hybrid cars: 0.5% of the vehicle's value per month
  • Other cars (combustion): 1% of the vehicle's value per month

Example: a combustion car worth 120,000 PLN means an additional employee income of 1,200 PLN/month, subject to PIT and ZUS contributions.

Company Car Insurance

OC and AC as Costs

  • OC (third-party liability) — always 100% tax-deductible (no limit)
  • AC (comprehensive) — tax-deductible in proportion to the limit:
    • Vehicle value up to 150,000 PLN — 100% of AC premium as cost
    • Above the limit — proportionally (e.g., car worth 200,000 PLN, limit 150,000 PLN → 75% of premium deductible)

GAP, Assistance, NNW

Additional insurance (GAP, roadside assistance, NNW personal accident) is fully tax-deductible provided it is related to business activity.

Parking and Road Tolls

Parking fees, motorway tolls, vignettes, and paid parking zones are vehicle running expenses. They follow the same rules as other costs:

  • 100% deductible — exclusively business vehicle
  • 75% deductible — mixed-use vehicle
  • 20% deductible — private vehicle (flat rate)

Summary — What Works Best?

There is no single answer. The choice depends on your situation:

  • Minimal business use → private car with the 20% flat deduction
  • Regular use, limited budget → operational lease with 50% VAT
  • Exclusively for business, full optimisation → company car with mileage log, 100% VAT, 100% costs
  • Expensive car → consider an electric vehicle (higher 225,000 PLN limit)

You can run detailed calculations for your situation using our tax calculators. Read more about business costs in the article What Can You Include in Business Costs?. If you need help accounting for a car, the LinTax Wroclaw accounting firm will ensure your vehicle is correctly reflected in your books and your tax position is optimised.