VAT Exemptions for Company Cars

Transcription

1

2

3 VAT Exemptions for Company Cars does it effect the Environment in the Czech Republic? Adam Helebrant Department of Economic Instruments MoE

4 Scope Evaluation made by MoE, no precise case study (as was EU study in 2009) Comparison of economic and environmental indicators Regulation Impact Assessment (env. conditions not obligatory) Concentration on corporate behavior before and after VAT law (input tax block rule) in contemplation

5 Data Sources Czech Statistical Office( Czech Environmental Information Agency ( MoE Automotive Industrial Association AIA ( Ministry of the Interior Central Car Registry ( Corporate Vehicle Observatory (

6 Taxes and Fees What burdens have to be faced by a company Direct Taxes Indirect Taxes Income tax Road tax VAT Excise tax Road toll Environment fee (registration of old cars) Vehicle running costs

7 Allowances What relieves can be used by a company Depreciation VAT input tax block rule Employees benefits (car for private use is not counted as a part of gross income, welfare and health insurance contribution) Subtraction of costs from income tax

8 Change of VAT Law Amended Act no. 235/2004 Coll., on VAT Following Public Directive on technical eligibility Came into force in 1. April 2009 Introduced input tax block rule changes - VAT as deductable item by purchasing company car in all categories included category M1=car up to 3,5 tons Before, just category N1=light CV up to 3,5 tons was freed from VAT Categories N,M according to Directive 97/27/EC (amended by 2001/85/EC and 2003/19/EC)

9 Categories M, N

10 Categories M, N

11 How it worked Companies changed M1 cars into N1 cars and use VAT advantage Construction change by installing unremovable grid between passenger room and cargo room Some extreme cases (Lexus, Maybach) statistically unimportant Since amended Act was released in IX/2008, companies hesitated in buying new cars waited till IV/2009 In total numbers of PC in 2009 no substantial changes Decrease in N1 category registration caused more by financial crisis than by VAT

12 Economic Indicatorsnumber of cars

13 II III IV V VI VII VIII IX X XI XII

14 I II III IV V VI VII VIII IX X XI XII

15 Registration of cars

16

17 VEHICLE PARC OF THE CZECH REPUBLIC data valid at Vehicle category Parc in units Average year of production Average age Cars ,30 13,70 Commercial Vehicles (Total) ,31 10,69 of it: Trucks ,24 9,76 Road Tractors ,93 13,07 Special vehicles ,88 26,12 Motorcycles ,00 32,00 Buses ,62 14,38 Trailers for CVs Trailers for Cars Trailers for Agricultural Tractors , , ,63 9,35 25,08 35,37 Semitrailers ,82 9,18 Agricultural tractors ,62 29,38 Other Vehicles ?? TOTAL: ,89 17,11

18 Total Numbers Total number of PC: almost 4,5 million, 74% petrol (gas), 26% diesel Average age 13,7 yrs, 60% is older than 10 yrs Ratio of company cars on first registration in 2009 was 41,28% Ratio of company cars on total number of PC is about 14%

19 Environmental Indicators blems in the transportation sector include the ever increasing transpo acity, which is the source of most greenhouse gas emissions, and the avourable composition of both the passenger and freight fleets (a lar ber of older vehicles that do not comply with EURO 2 4 emission ndards).

20 Environmental Indicators Road traffic produces NOx, SPM and VOC. At this current time the production of the total emissions is still reasonably in decline, but there are concerns about an increasing trend in the emissions SPM and NOx from mobile (especially from road traffic) and small sources, i.e. in particular from domestic heating. Also over the decline of all emissions from the year 2000, the air quality is stagnant.

21 State Budget Total tax revenue in mil. EUR VAT revenue in mil. EUR (19%) Total tax revenue in mil. EUR VAT revenue in mil. EUR (21%)

22 Corporate Behavior VAT allowance as a financial source More cars, bigger cars, representative function Better equipment Fleet management services, insurance Corporative Vehicle Observatory study (less greening of fleet in CZ, less operational leasing)

23 Conclusions Total number of cars constantly growing Car usage growing, but not connected with VAT Structure of company cars changing, impacts: positive age of cars, new engine design, negative life cycle, more transport env.burden Environmental impacts in general steady no improvement More fiscal effects of input tax block rule (loss of tax revenue was estimated on cca 30 mil. EUR)

24 Conclusions In the future (2012), there are plans to excuse road tax for SMEs 2010, road tax 192 mil. EUR, half of it from PCs There are worse harmful subsidies and incentieves than simple VAT changes for corporation cars (selective state aid, scrappage schemes) Legislature change in 2009 had no great influence on behaviour of companies (unlike credit crisis)

25 Thank you for your attention Contact me at: phone: