Business owners who trade in passenger cars often ask how to treat excise duty they have paid as a tax-deductible cost. The question matters especially for recording expenses correctly in the tax books and for determining the moment when a given cost can be recognised. Understanding how excise duty on cars works and how it is settled is key to running a business in the motor trade correctly.
Excise duty on passenger cars is a significant cost item that can strongly affect the profitability of sales. Settling it correctly requires knowledge of the tax rules and the ability to apply them in day-to-day bookkeeping. These issues concern both business owners who keep a KPiR (tax revenue and expense ledger) and people who may sell a car privately.
Excise duty on passenger cars can be settled as a tax-deductible cost both in a business and on a private sale of the vehicle. The difference lies in the moment the expense is recognised and in how it is recorded in the tax books
What is subject to excise duty on passenger cars
The Excise Duty Act sets out precisely when a tax obligation arises in connection with passenger cars. Under Article 100 section 1 of that Act, excise duty applies to specific activities involving passenger cars that have not previously been registered in Poland under road traffic law.
The first category of taxable activities is the import of a passenger car not previously registered in Poland. This covers vehicles brought in from outside the European Union that have not been registered in Poland before. The second category is the intra-Community acquisition of a passenger car, that is, buying a vehicle from another EU member state, provided it has not previously been registered in Poland.
The third category is the first sale in Poland of a passenger car not registered in Poland. This category has two subcategories: vehicles manufactured in Poland, and vehicles on which excise duty was not previously paid on import or intra-Community acquisition.
A tax obligation for excise duty also arises on a further sale of a car not registered in Poland if excise duty was not previously paid in the correct amount. This can happen when an inspection does not confirm that the tax was properly paid
The rules also cover a special situation described in Article 100 section 2 of the Excise Duty Act. Under this provision, excise duty also applies to the sale in Poland of a passenger car not registered in Poland that follows the first sale, if excise duty was not previously paid in the correct amount and a tax audit, a customs and tax audit or tax proceedings did not establish that the tax had been paid.
Taxpayers selling passenger cars in Poland have specific formal and substantive obligations. Without being asked by the tax authority, they must file excise duty returns on the prescribed form with the competent head of the tax office (urząd skarbowy). They must also calculate the excise duty themselves and pay it into the account of the competent tax office.
On sales of passenger cars, excise duty is settled for monthly periods – the return is filed and the tax paid by the 25th of the month following the month in which the tax obligation arose. Different deadlines apply to an intra-Community acquisition: a simplified return within 14 days and payment of the excise duty within 30 days of the tax obligation arising, but no later than on the day the car is registered (Article 106 sections 1–3 of the Excise Duty Act)
Excise duty as a tax-deductible cost in a business
The PIT Act (personal income tax) contains no specific restrictions on including excise duty paid in the costs of running a business. Such an expense meets the general definition of a cost in Article 22 section 1 of the PIT Act, because it is directly connected with the business activity.
What matters most for settling excise duty correctly is how the cars bought in the business are classified. Cars bought by business owners who trade in vehicles and intended for resale are not classified as the company's fixed assets but as goods for resale. This classification is fundamental for how the related costs are recorded. Different rules apply when a car that was a fixed asset is sold — we cover them in our article on taxes on selling a company car.
For an asset to qualify as a fixed asset, it must meet several conditions together. First, it must be owned or co-owned by the taxpayer. Second, it must have been acquired or produced in-house. Third, it must be complete and fit for use on the day it is put into use, which means it has all the structural elements that allow it to function as intended.
For an asset to qualify as a fixed asset, its expected period of use in the business must be longer than one year. The decision is the taxpayer's and should be based on how the asset is planned to be used
The last condition for classification as a fixed asset is that the taxpayer uses the asset for the needs of the business or makes it available for use under a lease, rental or leasing agreement. For cars intended for trade, these conditions are not met, because the vehicles are bought to be resold, not to be used in the business over a long period. A separate issue is the tax treatment of replacement car costs when a business uses a car while its own is being repaired.
Recording excise duty in the tax revenue and expense ledger
How excise duty paid on passenger cars is recorded in the tax revenue and expense ledger follows from the implementing provisions to the income tax act. Under point 10 of the explanatory notes to the KPiR template, purchases of goods for resale, that is, items acquired in order to be resold, are entered in column 12 of the ledger (until the end of 2025 – column 10) at purchase price. A new regulation on keeping the KPiR has applied since 1 January 2026 (Journal of Laws (Dz.U.) 2025 item 1299). We keep KPiR entries, including purchases of goods for resale, for clients as part of our bookkeeping services.
The purchase price is defined precisely in § 2 point 2 of the regulation on keeping the KPiR. The purchase price means the price the buyer pays for the assets purchased, less VAT deductible under separate provisions. On import, the purchase price is increased by the customs duty due, excise duty and additional customs charges, and reduced by rebates, discounts and other similar reductions.
Where an asset is received as a gift or inheritance, the purchase price is taken to be the value corresponding to the purchase price of the same or a similar asset. These rules are key to determining correctly the book value of cars together with the excise duty paid.
Excise duty paid is an integral part of the purchase price of the car and should be recorded in column 12 of the KPiR as part of the value of the goods for resale. It should not be recorded as a separate item in column 15 for other expenses (until the end of 2025 – column 13)
The implementing provisions also set the rules for recording purchases of goods for resale. Under § 10 of the regulation on keeping the KPiR, expenses on purchasing basic materials and goods for resale are entered in the ledger according to the rules for deducting tax-deductible costs laid down in the income tax act (until the end of 2025, § 16 of the previous regulation required the entry to be made immediately after the goods were received, at the latest before they were moved to the warehouse, processing or sale).
In practice, the business owner records the tax-deductible cost in the form of the car's purchase price, including the excise duty paid, on an ongoing basis after receiving the vehicle. The taxpayer does not have to wait until the car is actually sold to recognise the cost in the tax books. The cost is recognised when the goods are acquired and the revenue when they are sold; cars unsold at the end of the year are included in the stocktake (spis z natury, § 20 of the regulation), which adjusts the year's costs.
Procedure for settling excise duty in bookkeeping practice
Settling excise duty on passenger cars in a business requires following a set bookkeeping procedure. The process starts when the vehicle is acquired and covers several key stages that must be carried out in line with the tax and accounting rules in force.
The first step is to document properly the purchase of the car together with the excise duty paid. The documents should contain all the necessary information about the vehicle, its value and the amount of excise duty paid. Next, the purchase should be correctly classified as goods for resale, which directly affects how it is recorded in the tax books.
- Receiving the documents confirming the purchase of the car and payment of excise duty
- Checking that the accounting documents are complete and correct
- Calculating the total purchase price of the vehicle including excise duty
- Recording the purchase in column 12 of the KPiR as goods for resale
- Preparing documentation for a tax audit
- Monitoring the deadlines connected with excise duty obligations
When recording the purchase, pay particular attention to calculating the total book value of the vehicle correctly. This value includes the car's purchase price increased by the excise duty paid and other costs directly connected with the purchase, such as customs duty or additional customs charges. All these items make up the purchase price within the meaning of the tax rules.
Documents relating to the settlement of excise duty on cars are kept until the tax liability becomes time-barred – as a rule 5 years from the end of the calendar year in which the tax payment deadline passed (Article 86 § 1 and Article 70 § 1 of the Tax Ordinance Act (Ordynacja podatkowa)). These documents may be examined by the tax authorities during this period
| Procedure stage | Timing | Documents required | Consequences of errors |
|---|---|---|---|
| Documenting the purchase | On the day the vehicle is received | Invoice, proof of excise duty payment | Inability to settle the costs |
| Recording in the KPiR | After receiving the vehicle and the purchase documents | Complete set of purchase documents | Errors in the tax settlement |
| Preparing for sale | Before offering the car for sale | Vehicle technical documents | Delays in completing the sale |
| Settling the sale | On the day of sale | Sale agreement, handover documents | Incorrect settlement of the result |
Excise duty on a private sale of a car
The situation is different when a passenger car is sold privately. Under Article 10 section 1 point 8 letter d of the PIT Act, a source of income is the sale for consideration of movable property made before six months have passed, counted from the end of the month in which it was acquired. In such a case, this is a source of income separate from business activity.
The way income from a private sale of a car is calculated is set out in Article 24 section 6 of the PIT Act. Income from the sale for consideration of the items referred to in Article 10 section 1 point 8 letter d, if the revenue from the sale is not business revenue, is the difference between the revenue from the sale of the items and the cost of acquiring them, reduced by the value of expenditure incurred while owning them.
The cost of acquisition on a private sale of a car was clarified in an individual tax ruling (KIS) issued by the Director of National Tax Information on 25 May 2020 (ref. 0113-KDIPT2-1.4011.173.2020.2.ISL). According to this ruling, the cost of acquisition is the amount shown on the invoice or car purchase agreement plus the costs connected with the purchase, including, among others, the tax on civil law transactions (PCC) paid when the car was bought and the excise duty, if the car was brought in from abroad.
The cost of acquiring a car on a private sale also includes the fee for the first roadworthiness test in Poland, translation of documents, registration plates and insurance of the car in transit before it is registered. All these expenses can reduce the tax base
The costs of the sale also include expenses incurred directly in connection with selling the vehicle. These may be, for example, commission fees for brokering the sale, the cost of press or online advertisements, or fees for a vehicle valuation by an appraiser. If the taxpayer incurred such expenses, they can take them into account when determining the income from the sale.
A separate category is expenditure incurred while owning the car. This category covers only expenses on repairing and improving the vehicle, such as repairing or replacing the engine, bodywork and paintwork, or installing an LPG system. It does not include running costs such as oil changes, fuel, routine roadworthiness tests or AC and OC (motor third-party liability) insurance.
Differences in settling excise duty between a business and a private sale
Comparing how excise duty paid on passenger cars is settled in a business and on a private sale reveals significant differences that matter in practice for taxpayers. These differences concern mainly the moment the cost is recognised, how it is recorded and when it is settled with the tax authorities.
In a business, the excise duty paid is part of the purchase price of goods for resale and is recorded when the vehicle is acquired, in column 12 of the tax revenue and expense ledger. The cost is recognised right after the car is received, regardless of when it is actually sold. The business owner can therefore deduct this cost as early as the time of purchase, which affects ongoing tax settlements.
On a private sale of a car, the situation is different. The excise duty paid is included as part of the vehicle's cost of acquisition, but it is settled only when the car is sold, and only if the sale takes place before six months have passed from the end of the month of acquisition. If the sale takes place after that period, the revenue from the sale is not subject to income tax.
Excise duty on a private sale of a car is settled in the annual PIT-36 tax return, which must be filed by 30 April of the year following the year of the sale. The taxpayer must calculate the income and the tax due themselves
- In a business, the excise duty cost is recognised when the vehicle is acquired
- On a private sale, the excise duty cost is settled only at the time of sale
- A business must record the cost in its ongoing tax books
- A private sale is settled in the annual tax return
- Business owners can deduct the cost regardless of the sale
- On a private sale, the excise duty cost only reduces the income from that sale
These differences matter in practice, especially for tax planning and cash flow management. Business owners trading in cars can settle excise duty costs on an ongoing basis, which allows tax burdens to be optimised over shorter settlement periods. Individuals selling privately, on the other hand, must wait until the sale actually takes place to benefit from deducting the excise duty costs.
Documentation and formal obligations
Settling excise duty on passenger cars correctly as a tax-deductible cost requires keeping proper documentation and meeting certain formal obligations. These requirements differ depending on whether the settlement concerns a business or a private sale of a vehicle, but in both cases they are important to avoid problems with the tax authorities.
In a business, the basic obligation is to keep the tax revenue and expense ledger in line with the rules in force. The excise duty paid must be properly documented and recorded in the right column of the ledger. Documents confirming that this cost was incurred may include VAT invoices, bills, proofs of excise duty payment to the tax office or other accounting documents confirming the expense.
Pay particular attention to the completeness of the documents relating to the purchase of the car together with the excise duty paid. These documents should contain all the information needed to identify the vehicle, its value, the amount of excise duty paid and the date of purchase. On import, customs documents confirming the vehicle's proper clearance are also important, and on an intra-Community acquisition – the simplified return and proof of excise duty payment.
All documents relating to the settlement of excise duty on cars are kept until the tax liability becomes time-barred – as a rule 5 years from the end of the calendar year in which the tax payment deadline passed. This obligation follows from Article 86 § 1 and Article 70 § 1 of the Tax Ordinance Act, and the documents may be examined by the tax authorities during this time
A business owner running a car dealership brought vehicles in from Germany and paid excise duty on the intra-Community acquisition. All documents relating to the purchase, the transfer of the vehicles to Poland and the payment of excise duty were systematically archived and recorded in the KPiR as part of the purchase price of goods for resale. During a tax audit, the authority was able to verify the excise duty costs without difficulty thanks to the complete documentation.
On a private sale of a car, the documentation obligations are somewhat different but equally important. The taxpayer must keep documents confirming the purchase of the vehicle, payment of excise duty and all costs connected with the purchase and any expenditure incurred while owning it. These documents will be needed to settle the income from the sale correctly in the annual tax return.
In a tax audit, the authorities will verify not only the amount of the costs incurred but also their connection with the taxable item and whether they are properly documented. Lack of proper documentation may result in the expense not being accepted as a tax-deductible cost, which increases the tax base and leads to additional tax burdens.
