Company Car in Czech s.r.o. Company or Trade license.
There are basically three ways to put a car in the company:- Buying a car,
- Leasing a car,
- Using a private car.
Buying / Renting / Leasing a Car
Renting a car is astronomically expensive, and should only be used sporadically, otherwise it quickly costs more than a leased car.Buying is cheaper than leasing, but creates a gap in the budget. On the positive side, buying reduces the taxes of that year (less profit), and in case of a financial crisis the car can quickly be sold again (albeit for much less money than you bought it for).
Leasing has the benefit of 48 or 60 monthly fixed payments that can be budgeted.
Downside is that breaking the contract is either not possible or expensive.
Also, vehicle modifications are not welcomed by the leasecompany.
Combinations also exist: A downpayment ('Akontace') of 20-60% + 48/60 payments ('Platby').
Operational Lease / Financial Lease / Car Loan
An operational lease is all-inclusive: repairs, service, tires all included in the lease sum.A financial lease only covers the price of the car. Repairs, service and tires you will need to pay yourself.
Also it is possible to take a car loan, which is not a lease.
Car VAT Deduction / Refund
The 'old rule' was that VAT can only be deducted if the car has in the 'technicak' an 'N' specification ('utility vehicle'). If the car has an 'M' (normal passenger car) specification the VAT was not deductable.However, since 01.04.2009 the VAT on all cars (also 'M' specification) is deductable unless the VAT has been re-claimed by the previous owner (so watch out with a second-hand car)
For purchases up to a year before VAT registration the VAT can be reclaimed provided that is is a company asset. So, if you earlier bought a car with VAT into the gusiness, this VAT can be reclaimed.
A lease car is not a company asset, since it is still owned by the lease company during the lease. Therefore, of any payments on a lease (including downpayments / deposits) before VAT registration, the VAT can not be reclaimed.
Car Depreciation - mimoradné odpisy 2009 / 2010
Because of the economic situation, the government offers now for a limited time accelerated depreciation 'write-off' on cars'. Instead of 5 years, it is now possible to write off the car in only 24 months:- during the first 12 months, 60% of the value,
- during the last 12 months, 40% of the value,
- the car must be bought between 1.1.2009 and 30.6.2010
- you must be the first owner, so this doesn't work for second-hand cars
Car Costs
All car-related costs (lease costs, fuel, tires, repairs) are expenses, as long as can be proven that the costs were necessary for 'conducting business activities' and the car has been registered for company road tax (silnicní dan).A loan can not be deducted as company expense, it is calculated in another way.
If a company car is also used for private trips only part of the car costs can be put into the bookkeeping. In addition, the employee will have to add a certain percentage to his income declaration, because use of a car is considered 'non-financial benefit'.
Using a Private Car - Paying yourself per kilometer
A good alternative for leasing and buying is using your private car, especially if your car is a bit older.The compensation may be higher than the actual costs.
The compensation is based on a fixed part (sazba zkladní náhradny platná) and the average fuel price (prumerné ceny PHM). Both are determined and published by the Czech tax office.
| Fuel | fixed / km | Euro 91 | Euro 95 | Euro 98 | Diesel |
|---|---|---|---|---|---|
| 2009 | 3.90 | 26.30 | 26.80 | 29.00 | 28.50 |
| 2010 | 3.90 | 28.50 | 28.70 | 30.70 | 27.20 |
example:
Suppose the car runs 10 km on fuel of 25 CZK/l. That is per km 2.5 CZK.
Compensation is 3.90 (fixed) + 2.50 = 6.70 CZK / km.
A trip to Kolin and back 6.70 / km * 120 km = 804 CZK.
if you pay yourself per kilometer no other car-related costs can be put in the bookkeeping
and this car must be registered for company road tax, even though it is not owner by the company.
Company Road Tax
Road Tax for a company car (not buses and trucks) is between 1.000 and 4.000 CZK (depending on engine size and pollution catagory) annually, to be paid in quarters or at once. Note that this is a completely different thing than the highway sticker of 1000 CZK. You have to pay both.Alexio recommends paying road tax at once at the beginning of the year, because forgetting a payment could result in a disproportional fine from the tax office and possibly rejecting car costs from the accounting.
On 01.02.200x a company car needs to be re-registered as company car. A car bought during the year has to be registered as soon as possible after the purchase.
Milage Report
No matter how the car is put in the company, make sure every kilometer is registered, whether it is business or private. Taxoffices routinely want to see this registration, not having it can have unpleasant consequences (such as not accepting any car costs of the entire year in the bookkeeping).For every trip it is necessary to register:
date, time, starting address, tacho, purpose of trip (client), date, time, end address, tacho
For trips abroad is the additional requirement for every time a border is crossed: date, time, border point, tacho in order to claim daily allowances while being abroad (for an average EU country this is 50 - 60 euros / day).
Alexio will provide to each accounting customer free templates to accurately record business trips, mileage reports and daily allowance.