Business owners in Poland who lease cars for their business must take into account special tax rules on cost limits. Determining the value of a leased car for tax purposes requires knowledge of the PIT Act (personal income tax) and of the rules for settling lease agreements. Applying the correct limit – from 1 January 2026, PLN 100,000 for combustion-engine cars with CO2 emissions equal to or higher than 50 g/km, PLN 150,000 for cars with emissions below 50 g/km and PLN 225,000 for electric and hydrogen cars – directly affects the amount of tax-deductible costs the business owner can recognise.
An operating lease is a popular way of financing company vehicles, but its tax treatment is subject to special restrictions. The key is to distinguish between the capital part and the interest part of the lease instalment, because the limit applies only to the former. In addition, the value of the car for tax purposes includes not only the net price of the vehicle but also VAT to the extent that the taxpayer cannot deduct it. A car hired while yours is being repaired is treated differently, as described in our post on the tax treatment of replacement car costs.
Tax rules for operating lease agreements
For tax purposes, an operating lease agreement has specific features that determine how the parties settle it. Under the PIT Act, lease payments can be a tax-deductible cost of the lessee, provided that certain statutory conditions are met.
An operating lease agreement must be concluded for a fixed term of at least 40% of the standard depreciation period for movable assets. For real estate, the minimum term is 5 years. The sum of lease payments net of VAT must correspond to at least the initial value of the fixed asset
The basic requirement for treating an agreement as an operating lease is to keep the right time and financial proportions. The lessor remains the owner of the vehicle throughout the agreement and keeps the right to make depreciation write-offs. The lessee, in turn, regularly recognises the lease instalments paid as tax-deductible costs of the business.
The operating lease model assumes a clear causal link between the lessee's expenses and the lessee's business. As a result, lease payments can be fully treated as tax-deductible costs, subject to the applicable statutory limits.
In an operating lease, the lessor keeps full ownership of the leased asset and makes the depreciation write-offs. The lessee can treat the lease instalments as tax-deductible costs, provided that the vehicle is used for business purposes
It is also important that the tax rules require the sum of all lease payments to correspond to at least the initial value of the fixed asset. If further lease agreements are concluded for the same vehicle, the sum of payments must correspond to at least the market value of the vehicle on the date the next agreement is concluded.
Restrictions on settling lease payments for passenger cars
The possibility of treating lease payments as tax-deductible costs is significantly restricted for passenger cars. The PIT Act introduces a special limit intended to reduce the tax benefits of using luxury vehicles.
Under the tax rules, lease payments for a passenger car are not tax-deductible costs to the extent they exceed the part determined in the proportion that the limit amount (from 1 January 2026, PLN 100,000 or PLN 150,000 – depending on CO2 emissions – or PLN 225,000 for electric and hydrogen cars) bears to the value of the passenger car (Article 23(1)(47a) in conjunction with point 4 and Article 23(5e) of the PIT Act). This restriction also applies to rental, lease (dzierżawa) and other similar agreements. The new limits also apply to payments under lease agreements concluded before 2026 – the transitional provision (Article 30 of the Act of 2 December 2021, Journal of Laws (Dz.U.) 2021 item 2269) covers only vehicles entered in the taxpayer's fixed asset register before 1 January 2026 (this was also confirmed by the Director of KIS in an individual tax ruling of 8 April 2026, 0115-KDIT3.4011.157.2026.1.DP).
In a lease, the limit applies only to the capital part of the lease instalment, which repays the value of the car (Article 23(5c) of the PIT Act). The interest part of the instalment is not restricted and can be treated in full as a tax-deductible cost
Payments for passenger car insurance premiums are excluded from this restriction. However, insurance premiums calculated on the value of the car (e.g. AC, comprehensive cover) are subject to a separate limit – only the part determined in the proportion that PLN 150,000 bears to the value of the car adopted for insurance purposes is a cost (Article 23(1)(47) of the PIT Act). OC (third-party liability) and NNW (personal accident) premiums are not limited.
Applying the limit requires a precise split of the lease instalment into the capital part and the interest part. Only the capital part is subject to the proportional restriction, while the interest part can be recognised in full as a tax-deductible cost. This split should follow from the lease agreement documents and the repayment schedule.
| Type of payment | Limit applies | Legal basis | Notes |
|---|---|---|---|
| Capital part of the instalment | Yes, proportionally | Article 23(1)(47a) and 23(5c) PIT | Limit PLN 100,000 / 150,000 / 225,000 |
| Interest part of the instalment | No | Article 23(5c) PIT | Fully deductible |
| Insurance premiums | No (lease limit) | Article 23(1)(47a) and (47) PIT | AC: separate PLN 150,000 limit; OC and NNW without limit |
| Additional fees | Yes, if they repay the value of the car | Article 23(1)(47a) and 23(5c) PIT | Depending on their nature |
How to determine the value of the car for tax purposes
Determining the value of the car correctly is a key element in calculating the lease payment limit. This value is not limited to the net price of the vehicle but also includes VAT to the extent that the business owner cannot deduct it.
The value of the car is based on the net value under the lease agreement, increased by non-deductible VAT (as stated by the Minister of Finance in the tax explanations of 9 April 2020 on passenger cars), which should reflect the actual market value of the vehicle on the date the agreement is concluded. If the value stated in the agreement differs significantly from the market value, this may be treated as an attempt to circumvent the tax rules. If the car's use changes later, remember the VAT adjustment after a change of car use.
The value of the car for tax purposes consists of the net value of the vehicle increased by VAT that is not input VAT for the lessee. It also includes VAT to the extent that the taxpayer is not entitled to deduct it
For business owners who use the vehicle for mixed purposes, a VAT taxpayer as a rule deducts 50 per cent of input VAT (Article 86a(1) of the VAT Act), regardless of the actual share of private use. The remaining 50 per cent of VAT increases the value of the car for the purposes of the limit (Article 23(5a) of the PIT Act). Different rules apply when the car was never part of the business – they are explained in our guide on selling a private car and PIT.
Pay particular attention to cases where the lease agreement covers additional services or vehicle equipment. All these elements should be included in the value of the car if they are an integral part of the leased asset and cannot be separated from it.
- Determine the net value of the car under the lease agreement
- Calculate the VAT due on the value of the vehicle
- Determine the percentage of VAT that the taxpayer cannot deduct
- Add the non-deductible part of VAT to the net value of the car
- Check whether the value determined reflects the market value of the vehicle
Applying the limit in practice
Applying the limit (PLN 100,000, PLN 150,000 or PLN 225,000) requires detailed calculations that take into account the actual value of the car and the structure of the lease instalments. The rate at which payments can be treated as tax-deductible costs is calculated as the ratio of the limit amount to the value of the car determined under the tax rules.
In practice, this means that if the value of the car exceeds the applicable limit, the business owner can treat only the corresponding part of the capital portion of the lease instalment as a tax-deductible cost. The interest part remains fully deductible regardless of the value of the vehicle.
The rate at which lease payments can be treated as tax-deductible costs is calculated using the formula: limit amount (PLN 100,000, PLN 150,000 or PLN 225,000) / value of the car × 100%. The result is the maximum percentage of the capital part of the instalment (including the non-deductible VAT attributable to it) that can be treated as a cost
Here is an example calculation for a vehicle with CO2 emissions below 50 g/km (limit PLN 150,000) with a net value of PLN 150,000 and VAT of PLN 34,500, where only 50 per cent of VAT can be deducted. The value of the car for tax purposes is PLN 167,250 (PLN 150,000 + PLN 17,250 of non-deductible VAT). The deduction rate is 89.7 per cent (150,000 / 167,250).
With a capital part of the lease instalment of PLN 2,000 (including non-deductible VAT), the business owner can treat PLN 1,793.72 (PLN 2,000 × 150,000 / 167,250) as a tax-deductible cost. The interest part of the instalment can be treated in full as a tax-deductible cost.
A business owner running a consulting business concluded in 2026 a lease agreement for a passenger car with a combustion engine and CO2 emissions above 50 g/km (limit PLN 100,000), worth PLN 180,000 net. The owner also uses the vehicle for private purposes and therefore deducts 50% of VAT. The monthly lease instalment (including the non-deductible part of VAT) is PLN 2,500, of which PLN 2,000 is the capital part and PLN 500 the interest part. The value of the car for tax purposes is PLN 200,700 (180,000 + 50% of PLN 41,400 VAT). The deduction rate for the capital part is 49.8% (100,000 / 200,700). The business owner can treat PLN 996.51 of the capital part and the full PLN 500 of the interest part as tax-deductible costs.
Documentation and records of lease settlements
Keeping proper documentation of a car lease settlement requires particular care with accounting records and with storing source documents. The taxpayer must be able to prove that the limit was applied correctly and how the value of the car was determined. Lease instalments, the limit and non-deductible VAT are recorded in the books of clients who use our accounting services.
The basic document is the lease agreement, which should clearly state the value of the leased asset and split the instalments into the capital and interest parts. A repayment schedule showing the structure of each instalment over the entire term of the agreement is also necessary.
Lease documentation must include the main agreement, the repayment schedule, invoices for lease payments and documents confirming the use of the vehicle in the business. All documents must be kept until the tax liability becomes time-barred – as a rule, 5 years from the end of the year in which the tax payment deadline passed (Article 86 § 1 and Article 70 § 1 of the Tax Ordinance Act (Ordynacja podatkowa))
If the vehicle is used only for business purposes, a VAT taxpayer must keep a vehicle mileage log (Article 86a(4) of the VAT Act). Without it, the car is deemed to be used also for purposes unrelated to the business, which affects the VAT deduction and the income tax settlement (Article 23(5f) of the PIT Act).
Pay particular attention to the VAT invoices issued by the lessor. They must meet all formal requirements and show VAT correctly. For a vehicle used for mixed purposes, the invoice should make it possible to calculate the correct proportion of the VAT deduction.
- Lease agreement stating the value of the leased asset
- Repayment schedule split into the capital and interest parts
- VAT invoices for lease payments issued by the lessor
- Vehicle mileage log (when the vehicle is used only for business)
- Documents confirming the market value of the vehicle on the date of the agreement
- Calculations of the rate at which payments are treated as tax-deductible costs
How the type of business affects the lease settlement
The way lease payments are settled may differ depending on the type of business and the tax status of the business owner. The possibility of deducting VAT is particularly important, as it directly affects the value of the car used to calculate the limit.
Business owners carrying out VAT-taxable activities have the right to deduct input VAT on lease payments, provided that the vehicle is used for those activities. For mixed use, the right to deduct is as a rule 50% of input VAT (Article 86a(1) of the VAT Act), and a full deduction requires the vehicle to be used only for business and a mileage log to be kept (Article 86a(3) and (4) of the VAT Act).
Business owners exempt from VAT or carrying out VAT-exempt activities cannot deduct input VAT on lease payments. In that case, the full amount of VAT increases the value of the car for the purposes of the tax limit
CIT (corporate income tax) taxpayers are subject to the same limits (PLN 100,000, PLN 150,000 or PLN 225,000 – Article 16(1)(49a) in conjunction with point 4 and Article 16(5e) of the CIT Act), and the rules for applying them to leases are the same as in PIT (Article 16(5a) and (5c) of that Act). The key remains to determine the value of the car correctly and apply the right proportions.
Where the business is run as a partnership that is not a CIT taxpayer (e.g. a civil-law partnership (spółka cywilna) or a general partnership (spółka jawna)), each partner settles their share of the lease payments under the rules of tax transparency. Costs determined after applying the limit are allocated to the partners in proportion to their right to a share in the profit (Article 8(1) and (2) of the PIT Act).
Tax audits of lease settlements
Tax authorities pay particular attention to whether lease payments are settled correctly, especially for high-value vehicles. An audit may include verifying the value of the car, whether the limit was applied correctly and how the vehicle is actually used in the business.
The most common irregularities involve understating the value of the car in the lease agreement to circumvent the tax limit. Tax authorities may request documents confirming the market value of the vehicle and compare it with the value under the agreement.
During a tax audit, the authorities may check whether the value of the car stated in the agreement matches its actual market value. Significant discrepancies may be treated as an attempt to circumvent the tax rules
The second group of irregularities concerns an incorrect split of lease instalments into the capital and interest parts. Taxpayers may try to increase the share of the interest part, which is not limited, at the expense of the capital part. This practice is not allowed and may result in a tax arrear plus late-payment interest.
An audit may also cover the actual use of the vehicle in the business. Tax authorities may request the vehicle mileage log and documents confirming its business use.
- Prepare complete documentation of the lease agreement and repayment schedule
- Keep documents confirming the market value of the vehicle
- Keep detailed records of the vehicle's use in the business
- Keep all VAT invoices and accounting documents
- Prepare calculations of the rate at which payments are treated as costs
- Document how the value of the car was determined for tax purposes
