Tax refund when buying a car: is it possible to return income tax from a car taken on credit?

Drawing up a VAT return

First, decide on the total amount of tax payments to be refunded. For this purpose, the tax on product sales for the corresponding period is calculated, plus the tax that must be paid when purchasing goods, performing work or providing services.

Important!

If, when preparing a declaration, the total amount of tax paid turns out to be greater, then the tax can be refunded.

To receive a tax refund, you must submit a VAT return by the 20th day of the month following the reporting quarter.

To confirm the reimbursement of VAT from the budget, tax authorities conduct a desk audit of the submitted declaration. During an inspection at a legal entity in accordance with Art. 172 of the Tax Code of the Russian Federation, documents may be required confirming the legality of the use of tax deductions.

To speed up the process, it is better to prepare and submit these documents yourself. Upon completion of the inspection, a report is drawn up in the form approved by the Federal Tax Service.

Receiving a tax deduction when buying a car

A scheme that works if a citizen has made several large transactions within one year. For example, I sold a car and bought an apartment for the same price. Alienation of a car will require payment of 13%, and the purchase of an apartment will return this amount back. In this case, you will not need to pay income tax.

What can I get a tax deduction for?

Article 220 of the Tax Code of the Russian Federation mentions the right of a citizen to return part of the money in cases where loan funds are spent on the purchase of housing or its construction, as well as to repay existing debt with the intention of buying or building new housing. A car, as movable property, is not included in the list of tax deductible items, even if its value is comparable to the cost of an apartment or house.

It is important to remember that the profit-free sale of cars that have been owned for less than 3 years does not exempt sellers from the need to file a 3-NDFL tax return! The reporting document is submitted at the location of the taxpayer within the established time frame

VAT refund for purchased car

If the tax authority decides to refund the VAT, then the next day a written order is sent to the Federal Treasury authority for territorial subordination.

The Treasury, within five days after receiving the order, returns the VAT amounts and notifies the Federal Tax Service about this.

After this, Federal Tax Service employees are required to inform the taxpayer in writing within five days about the decision made on a full or partial refund or credit of VAT. If a refund is refused, the Federal Tax Service sends a reasoned decision, which can be appealed by the taxpayer in court. This message is received by the head of the legal entity or his representative by mail or against signature.

Is it possible to get a tax deduction when buying a car?

Get qualified help right now! Our lawyers will advise you on any issues out of turn.

Yes - in the amount of 250 thousand rubles. No. Only individual entrepreneurs and legal entities have the right to it.

faces. For the purchase, payment of loan interest, construction and repair of housing. The right of citizens to return income tax when purchasing property is established in Article 220 of the Tax Code of the Russian Federation. According to this article, taxpayers have the opportunity to return part of the costs through property deductions: For the purchase of residential real estate; When renovating or constructing residential premises; When paying interest on a residential real estate loan.

In addition to property tax deductions, there are also social ones. According to Art. 219 of the Tax Code of the Russian Federation, you can receive a social deduction for expenses for: Assessment of professional qualifications, etc.

As you can see, you can get compensation from taxes mainly for vital expenses - housing, education and health. In 2021, a personal income tax refund when purchasing a car is still impossible. And we cannot expect changes in the Tax Code that would establish the right to return 13 percent income tax for a car in the near future.

Property deduction is provided only when selling vehicles.

The amount by which the tax base can be reduced is 250 thousand rubles. Read more about how to pay personal income tax and how to get a deduction when selling a car in a separate article.

So, property tax deduction exists only when selling a car.

No deductions are available for the purchase of vehicles.

Please note: VAT refund when purchasing a car in Russia for individuals. persons are also not provided

Only individual entrepreneurs and organizations can receive such VAT deductions.

According to paragraphs. 4 paragraphs 1 art. 220 of the Tax Code of the Russian Federation, the opportunity to return funds to pay credit interest exists only for a loan for the purchase or construction of housing. Refund of personal income tax on a car on credit according to the Tax Code is impossible.

This means that all costs of repaying the loan are borne exclusively by the car owner. So, unfortunately, it is impossible to get a deduction when buying a car on credit or without it. The state can compensate expenses through income tax only for the purchase of an apartment, house or other residential real estate.

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Nuances when refunding VAT after purchasing a car

To receive a refund of the paid tax, a legal entity must submit a complete package of documents without violating the deadlines specified in the law.

Important!

All invoices and source documents must be completed correctly, and the company must not have any underpaid taxes. Otherwise, the refund amount will be used to pay off tax debt.

Qualified lawyers specializing in tax legal relations will help you correctly understand all the issues of VAT refund for a purchased car. They will prepare the necessary documents and do everything necessary to receive the money due to the legal entity.

ATTENTION!

Due to recent changes in legislation, the information in this article may be out of date!
Our lawyer will advise you free of charge - write in the form below.

Myth and reality

It turns out that VAT refund when buying a car for personal purposes is a myth, because... an individual does not pay VAT and, accordingly, does not have the right to return it. But legal entities and individual entrepreneurs who are VAT taxpayers can return VAT on the purchase of a car if they use it directly in business activities.

That's all it seems. Don't be afraid of anything, formalize the deal legally and everything will be fine.

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Is it possible to refund VAT on a car purchase?

Good day to all. Glad to see you again on the pages of my blog. Today we will talk to you about whether it is possible to return VAT on the purchase of a car. I think many of you know that you can return value added tax when buying real estate without any problems, and have more than once wondered whether this is possible when buying a car.

Is it still possible or not?

So, let's think logically. With the purchase of housing, everything is clear: when purchasing real estate, the taxpayer can return 13% of the cost of the purchased apartment or house. Many of you have probably done this already.

There are more and more legally literate people in our country, which, by the way, is very encouraging! And the key word here is taxpayer , i.e. those who pay taxes, and those who do not pay cannot return taxes from the budget.

This is why VAT refund to an individual when purchasing a car is impossible.

A car is property, and therefore, the tax deduction should be looked for in the list of property deductions. However, after reading the tax code, we see that a property deduction can be provided to persons receiving income subject to personal income tax at a rate of 13% in the following cases (clause 1 of article 220 of the Tax Code of the Russian Federation):

When purchasing/constructing housing in Russia, including with the involvement of targeted loans and borrowings;
When selling property (including real estate) that was owned by an individual for less than 3 years;
When selling shares in the authorized capital of an organization;
When assigning rights under a share participation agreement in construction;
When purchasing a land plot and/or real estate located on it from an individual for state and municipal needs.

Unfortunately, in Russia, when buying a car, a personal tax refund is provided. does not apply to persons. The tax deduction for individuals is applied only when selling a car and makes it possible not to pay sales tax. I talked about this in detail in the article “Do I need to pay tax on the sale of a car?”

VAT refund when purchasing on credit

You may be surprised, but today in Russia the share of cars purchased with borrowed money, i.e. on credit, has already exceeded 50 percent.

Is it possible to get a VAT refund if the car was purchased on credit? Having examined this issue in detail, I came to the conclusion: VAT subject to refund from the budget can be reimbursed to the taxpayer due to the use of tax deductions provided for in Chapter 23 of the Tax Code of the Russian Federation.

At the same time, tax deductions for taxpayer expenses for the purchase of a car, including on credit, are not provided for by Chapter 23 of the Tax Code of the Russian Federation.

It's sad, you say. And you'll be right! For example, in the West, many countries provide state support for the population when purchasing property of significant value. Today I will not go into details of Western programs. Here's just a small example: if a citizen purchases a new car, then he is entitled to tax benefits in the future.

And this is absolutely fair! After all, he bought a car with his hard-earned and honestly declared money, from which, by the way, he paid taxes to the state honestly and on time. And how big money is earned in our country, and what taxes are paid, you know perfectly well even without me.

So draw your own conclusions! Here, either we change the world, or the world will change us.

I bought a new car

“Yes, I bought a car at a car dealership, I paid a lot of money!” - you say. And you'll be right! The cost of a car purchased at a dealership is an order of magnitude higher than the cost of a car purchased on the secondary market. But, unfortunately, the fact of purchasing a new car will not help you. The Tax Code is not bending here either! If you don’t pay VAT, it means you can’t get it back.

But if we are an organization, then...

But not everything is so sad. For those who pay taxes to the budget on the sale of goods or provision of services, i.e. is a VAT payer and has its own tax benefit.

If the car is registered in the name of a legal entity or an individual entrepreneur, is properly registered and registered, and is also used directly in business activities (for which there are, respectively, supporting documents: fuel receipts, invoices, waybills or rental agreements, etc. .p.), then a VAT refund is quite possible. Honestly! True, I again will not go into the intricacies of the process, because each case is unique and quite complex in its own way, this is already accounting work.

But please don't be scared! A competent approach to the matter, a good lawyer and accountant and the job, as they say, is in the bag. True, there are cases where VAT can be reimbursed from the legal budget.

the person does not succeed, but this is largely the fault of the person himself, illiterately drawn up documents, for example. The tax office will find fault with everything.

So, go ahead, put the car on the organization’s balance sheet, if possible, and return VAT or a tax discount for the same organization! But this is another song from the accounting repertoire.

And finally, this is a terrible word...

Leasing relations still seem to us like something out of the category of legal casuistry. But in vain! Abroad, leasing has long been the order of the day. You and I do not know the necessary and useful laws, and, therefore, the possibilities. Which is very bad! Let's improve, and therefore let's talk about leasing a car.

If you really need to buy a car, but don’t have the money to buy a car, you can use the services of not only credit institutions, but also leasing companies.

The company, at the client’s request, selects a supplier for the required car model and buys it. Then he rents it out to his client under certain conditions.

The leasing company does not receive its share of the money immediately, but as payments are received from the client.

In accordance with the law, the provision of leasing services is subject to VAT taxation, which entails the possibility of obtaining deductions. After all, leasing is a lease only with subsequent purchase; the leasing company remains the owner of the car until the contract is executed, although there are options when the car is placed on the buyer’s balance sheet.

And here, dear readers of my blog, it is important to correctly conclude a leasing agreement . Honestly, you can’t do without a good lawyer! Keep this in mind.

A legally correctly concluded contract, plus detailed consultations with a leasing company, will give you a comprehensive picture of your interaction with this company and, in particular, a VAT refund scheme.

And keep in mind that, again, this applies only to legal entities and entrepreneurs who are engaged in activities subject to VAT, which, by the way, is 18%; individuals pay only 13% of their income.

In addition, when purchasing a car through leasing, you can easily solve problems related to repairs, maintenance or technical inspection, car insurance, this can be done by a leasing company. And also in the event of car accidents or accidents, breakdowns or malfunctions, all questions and problems fall on the lessor.

Myth and reality

That's all it seems. Don't be afraid of anything, formalize the deal legally and everything will be fine.

Source: https://pokupkamashiny.ru/pokupka-avtomobilya/nds-s-pokupki-avtomobilya.html

Who is eligible for a 13% personal income tax refund?

If you want to get a tax deduction when buying a car, you need to know the requirements imposed by law. An individual must be a resident of the Russian Federation and have official earnings, from which income tax is withheld at the rate of 13%.

To pay compensation, a citizen fills out a declaration, collects the list of documents indicated above, and draws up an application for deduction. Sends a package of documents to the tax authority located at the place of residence. This must be done before April 30 of the year following the one in which the profit was made.

If the vehicle is owned by several owners, each of them submits a declaration. The tax refund will be paid in proportion to the share or by agreement between the co-owners.

It is advisable to submit the application for deduction and tax return to the Federal Tax Service at the same time.

Within 3 months, the inspectorate conducts a desk audit, based on the results of which a decision is made on payment of compensation or refusal. If there are no complaints about the attached documentation, the money will be credited to your bank account within a month.

The state considers personal transport more of a luxury than a necessity. In this regard, a refund of part of the income tax for the purchase of a vehicle is not provided. The law regulates only tax deductions when selling a car under certain conditions. If an individual alienates a car that has been owned for more than three years, he is given a benefit instead of a property deduction. There is no need to submit a declaration to the Federal Tax Service. Income tax will not be levied on the full amount received from the sale of the vehicle, but on part of it.

Basic options for saving

When selling a car, the individual who completed the transaction on the part of the seller receives a profit for his use.

Any income is subject to state taxes of 13% of the amount received. Of course, considering the rather high cost of the cars, the amount is impressive. However, there are ways to save your money from selling your personal vehicle.

USEFUL INFORMATION: How taxes are changing for Russians this year

One of the simplest is that when selling a car that has been in use for more than 3 years, taxes are not paid to the treasury. Therefore, in some cases, you can simply take your time and sell the car a little later so as not to pay tax. It is worth considering that in this case, the 3-year period begins to count from the date the individual receives ownership rights, and this should not be confused with the date of signing the contract.

However, in addition to this, there are several other ways to reduce the cost of paying tax duties. Let's take a closer look at them.

Selling without profit

You can make a tax contribution using the sales system without making a profit. In this case, the amount from which the income contribution is paid is calculated as follows: the price for which the car was purchased is subtracted from the amount received from the sale of the property. 13% tax is calculated from this difference. This is what you need to pay.

In cases where the number turns out to be negative, the seller is exempt from paying taxes. And this option is the most likely, since the cost of the machine always decreases during operation. To implement such a scheme, you must have the originals of all documents that confirm the cost of the initial purchase of the car.

Standard deduction

The standard deduction is a good loophole for those who are selling a car for a low price. The fact is that the law contains a clause stating that personal transport valued at less than 250 thousand Russian rubles is not subject to income tax, regardless of the time of its operation.

Of course, if we consider this amount as part of the purchase of a car, it may seem quite small. But sometimes the standard deduction can help avoid overpaying taxes.

In general, this loophole can be used in many cases, the main thing is to know about it and remember in time.

Application of the netting method

The netting method cannot be widely used, since for its use the situation must be quite specific. This method can only be used if in the year you sold the car you also purchased property that is eligible for a tax deduction. If the amount of taxes is equal, then as a deduction you are exempt from paying an income contribution.

To make it easier to understand, we will explain with a clear example. Citizen Grigorenko bought an apartment worth 1.7 million rubles in 2021. At the same time, he is a resident of the Russian Federation, officially works, and has never used his right to a tax deduction. This means that he has the opportunity to take advantage of the deduction. At the same time, in 2021, Grigorenko sold his car worth 1.7 million rubles, which he owned for less than 3 years, which means he must pay 13% tax for receiving income from it.

As you can see, such a situation is quite difficult to imagine in real life. However, there is such a way to save on tax on the sale of a car, and you can use it if it suddenly suits you.