The topic of tax-deductible costs is a frequent concern for our clients. Therefore, we strive to present you with compelling tax interpretations and court rulings on this topic.
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Today, we'd also like to present a less obvious expense. A bicycle, as we're talking about, can be used for tourism, recreation, and as a tool for burning excess calories, but it can also be used for business purposes (and we're not just talking about bicycle shops and repair shops).
A bicycle is environmentally friendly, cheaper to maintain than a car, and doesn't get stuck in traffic jams. The applicant used these arguments in her tax ruling application, in which she asked whether a bicycle used primarily for commuting to the office, government offices, and meetings with contractors would constitute a tax-deductible expense. She also asked whether, if the bicycle was purchased for over PLN 10,000, it could be recorded in the fixed asset register and depreciated. Interestingly, the application explicitly stated that the bicycle would primarily be used for business purposes, but could also be used for personal purposes.
In its interpretation of October 7, 2022, 0114-KDIP3-1.4011.779.2022.2.AC, the Director of the National Tax Information Service stated that a bicycle may constitute a tax-deductible expense, and if its initial value exceeds PLN 10,000, it may be depreciated. In its justification, the Director indicated that if the primary purpose and method of use of the bicycle is business use and it meets the criteria listed in Article 22a, paragraph 1 of the Personal Income Tax Act, and its value exceeds PLN 10,000, the applicant will be required to include the bicycle in the register of fixed assets and intangible assets as a fixed asset. The expense for purchasing the bicycle cannot be directly included in the costs of obtaining business income. Full depreciation write-offs on the bicycle's initial value may be included in tax-deductible expenses.
If the value of the purchased bicycle is below PLN 10,000, then the value of this bicycle can be included as a one-off cost of obtaining income from the business activity.
The authority also indicated that any use of the bicycle for other (personal) purposes may only be incidental.
The above interpretation indicates that alternative means of transportation to a car can also constitute a business expense. In the case of a bicycle, the entire purchase price will constitute a tax-deductible expense (whether as a one-time expense or through depreciation). For tax purposes, there's no need to consider the bicycle's price, mileage allowance, or fuel billing method.
So maybe it's worth considering switching from a car not only for your health, but also for your finances.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of October 13, 2024
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