In the day-to-day work of entrepreneurs, the question has always arisen whether a borrowed vehicle is subject to company car tax (CCTT). In the light of the discussions that have arisen in the course of my work, I will give my views on this issue.
On 29 March 2012, the Law on Vehicle Exploitation Tax and the Law on Business Tax on Light Vehicles was amended and entered into force on 1 May 2012. As amended, Section 10 of the said Act provides that „Business passenger vehicle tax is payable on a passenger vehicle owned or held by a trader or a farm, or used under a contract of employment, or borrowed from a person other than a trader or a farm.”. In turn, Paragraphs 1 and 3 of Article 11 of the aforementioned Law stipulate that „The tax on light vehicles of enterprises shall be paid by a merchant who has been assigned a registration number of the Commercial Register or by a farm registered in the Register of Enterprises, if the merchant or farm owns or holds a taxable vehicle referred to in Article 10 of this Law or if the merchant or farm is obliged to pay the tax in accordance with Paragraph 3 of this Article. If a merchant or a farm is not registered in the register as the holder of a vehicle but uses a vehicle on the basis of an employment contract or on the basis of a loan contract concluded with a person other than the merchant or the farm, that merchant or farm shall pay the company passenger vehicle tax.”
Having read the above provisions of the law, it is clear to the trader that the loaned vehicle is also subject to UVTR. However, we must not limit ourselves to these legal provisions. Attention should also be paid to Article 1(25) of the Road Traffic Act, which states that „The keeper of the vehicle is the natural or legal person who uses the vehicle on a legal basis (lease, rental or loan agreement, etc.).”
In turn, in accordance with Para 16 of the Cabinet of Ministers Regulation No 1080 of 30 November 2010 „Regulations on Registration of Vehicles”, „Vehicles shall be registered as owned, possessed or held...”. Returning to the Road Traffic Law, Article 13(1) tells us that „The vehicle registration certificate is a document containing the technical details of the vehicle's registration as well as details of the owner (possessor, holder) of the vehicle.”
Taking into account the definition of a vehicle keeper in the Road Traffic Law, it follows that if a trader lends or leases a vehicle from a natural or legal person, it should register with the CSDD as a keeper of a specific vehicle and should pay the UVTT. However, it should be noted that neither the Road Traffic Law, nor the Cabinet of Ministers Regulations, nor the Law on Vehicle Exploitation Tax and the Law on Enterprise Passenger Vehicle Tax oblige a trader to register as a vehicle keeper.
As stated on the CSDD website, vehicle owners have the possibility to register the actual user of the vehicle by indicating him/her as the holder on the vehicle registration certificate. If no other person is indicated as the keeper of the vehicle, the owner of the vehicle is indicated as the keeper on the certificate.
Although in real life the use of a car on a legal basis (lease, loan agreement) meets the definition of a vehicle keeper in the Road Traffic Law, borrowers or lessees are not always registered with the CSDD as vehicle keepers. Although significant changes have been made to the Law on Vehicle Exploitation Tax and the Law on Company Tax on Light Vehicles, taking into account the legislative loopholes, a situation will arise where traders will not see the obligation to pay VVAT to the actual user of the vehicle. For example, the owner of a vehicle, who is a natural person, orally lends the vehicle to a trader, with the understanding that a written loan agreement will be concluded after 3 days. But, due to busyness or other important reasons, no written loan agreement was concluded. This leads to a situation where the trader is not registered as the keeper of the vehicle. In this case, no UVPT will be payable although the trader will be the genuine user. If the vehicle is rented out, the lessor will pay income tax on the rental. On the other hand, if the vehicle is loaned, no income tax is payable as the owner may also loan the vehicle without consideration.
Thus, I consider it necessary to strictly regulate the obligation for a trader to register as the keeper of a vehicle when a vehicle is loaned, which also implies the obligation to pay UVTT to a trader who is not registered as the keeper of a vehicle but uses a vehicle on the basis of a loan agreement from a person who is not a trader. Changes are needed not only in the Law on Vehicle Exploitation Tax and Business Tax on Light Vehicles (which has been successfully done) but also in its subordinate and related laws and regulations. Otherwise, in view of the above, a trader using a vehicle owned by a natural person on the basis of a loan agreement can only be advised by the State Revenue Service to register with the CSDD as the holder of the vehicle, in accordance with paragraph 16 of the Cabinet of Ministers Regulation No 1080 of 30 November 2010 „Regulations on Registration of Vehicles”, and pay the UVTT without any legal consequences, but cannot be obliged to register with the CSDD and pay the UVTT with legal consequences.
