PCC tax and a car imported from the USA - is it compulsory? What to keep in mind after buying a car from America?

Find out if you have to pay PCC tax. And if not, which one? Customs duty, excise duty or maybe VAT? We clarify any doubts and suggest what to do after buying a car from the USA.

PCC tax - what is it? When is it required and when is it not? Some key information

The purchase of a car involves a number of formalities that must be completed in order to be able to legally drive the vehicle on the road. Amongst other things, the purchaser must remember to submit certain declarations to the tax office and pay the taxes prescribed by law. Otherwise, he will be committing a misdemeanour or fiscal offence and will not register the car.

Taxes applicable in Poland include, inter alia, the civil law transaction tax (PCC tax). It is commonly referred to as the enrichment tax or car purchase tax. When is it required? How much is it and who is exempt from paying it?

As a general rule, car purchase tax (PCC) must be paid if the transaction takes place between two individuals who are not engaged in a business. In effect, the purchase of the car is based on a contract rather than an invoice.

Pursuant to Article 1(4) of the Act of 9 September 2000 on tax on civil law transactions (Dz. U. 2000 No. 86 item 959), civil law transactions the subject of which are:

• things located in the territory of the Republic of Poland or property rights exercised in Poland,
• assets located abroad or property rights exercised there, if the place of residence or the registered office of the acquirer is located in Poland and the civil law transactions were performed on the territory of the Republic of Poland.

Importantly, if you are buying a new car, the car purchase tax (PCC) does not apply to you. The legislator has also made provision for several other exceptions, which you will learn about later in this article.

How much is PCC tax and how do I pay it?

The tax on civil law transactions is 2% of the value of the vehicle. You must submit the PCC declaration to the tax office within 14 days from the moment the contract is concluded. If you are the sole purchaser of the vehicle, fill in form PCC-3; however, if you bought the car with another person, form PCC-3/A. The money must go into the account of the tax office appropriate to your place of residence.

Importantly, even if the car purchase agreement shows a lower amount than the actual value of the car, you will not pay less PCC tax. This is because the tax officials working at the tax office determine the liability based on the market value of the vehicle.

If the tax office considers that the amount of PCC tax you have paid is inadequate, it will call on you to correct your declaration. Unless the lower value of the car, and therefore the amount of car purchase tax, is due to damage to the vehicle. You will need to prove this, for example by attaching an estimate of the repairs to the PCC form you submit to the tax office.

The Utax officehas 5 years to verify your return and the amount of PCC tax paid. Therefore, if you don't hear from anyone within a few weeks of submitting your documents, it doesn't mean that everything is in order. Remember, you can always appeal against a decision of the tax office ordering you to adjust the amount of PCC tax. However, this will not always be worthwhile for you..

Who is exempt from PCC tax when buying a car?

The purchaser of the vehicle who purchased the car is exempt from paying the PCC tax:

• at a car dealership,
• at a car dealership,
• In a person who is running a business.

If you have concluded a sale and purchase transaction with any of the above-mentioned entities, you should receive a VAT invoice or a margin VAT invoice. If this is the case, payment of VAT exempts you from paying the PCC.

You do not have to pay PCC tax also in a situation where you have purchased a car from a natural person, as long as the market value of the car does not exceed PLN 1,000. The obligation to file a declaration with the relevant tax office and pay the fee also does not apply to buyers who have purchased a car for the use of a disabled person.

Please note: If a car commissioner doing business only mediates the transaction and the car owner is an individual, the purchaser of the vehicle must pay PCC tax.

Car purchase tax - what's the penalty for non-payment of PCC?

Failure to pay PCC tax on time can even be considered a tax offence. What consequences the taxpayer will face depends on who first realises that the liability has not been paid. If this is done by the purchaser, then the purchaser has a chance to avoid a fine. However, he or she must submit a so-called actual regret to the tax office as soon as possible. This is a declaration in which the taxpayer admits his mistake. Just as quickly, he should pay the PCC tax with interest.

The stairs begin when it is the tax office that first realises that the car buyer has skipped the tax obligation. In such a case, the non-payment of PCC may be classified as an offence, or in extreme cases - a fiscal offence. An officer of the tax office will then issue a ruling requiring the purchaser to pay a fine of 10 per cent of the minimum wage (up to 20 times this amount).

PCC tax and a car imported from the USA - should you pay it?

Buying a car from the USA is an opportunity to gain an uncommon car. However, it requires various formalities. Otherwise, the vehicle will sit in a garage instead of being driven on the road. So does buying a vehicle from the USA mean you have to pay PCC tax?

As mentioned, car purchase tax (PCC) is payable by the car buyer in two cases:

• if the car was in Poland at the time of purchase,
• if the vehicle was out of the country at the time of purchase, but was purchased by a person who lives in Poland, and the contract of sale was concluded within RP.

What does this mean in practice for people who have purchased a car from the USA? If the purchaser used the services of a professional car import company and bought the car while it was outside Poland and the contract for the sale of the vehicle was concluded in the USA, then he does not have to pay PCC tax. However, this does not mean that he is completely exempt from all state tributes. He must, for example, pay excise duty and VAT.

When is excise duty and when is PCC for cars from the USA?

If the car is owned by a foreigner and the sales contract is concluded in Poland or the subject of the contract is located in our country, the buyer pays car purchase tax (PCC tax). On the other hand, in the case of a contract of sale concluded outside Poland and concerning a car located outside Poland, the buyer must pay excise duty.

Excise duty - how much tax to the tax office on a car imported from abroad? How do I pay it?

Excise duty is the tax you have to pay when you bring a car into Poland from abroad, including the USA. It applies when you buy both a used and a new vehicle. It is affected by three factors - the capacity and type of engine and the value of the car. How does this look in practice? If the engine capacity:

• does not exceed 2,000 cm³ - in which case the excise duty for cars with internal combustion engines is 3.1 per cent of the vehicle value and 1.55 per cent for HEV hybrids and MHEV soft hybrids,.
• exceeds 2000 cm³ - then you have to pay an excise duty of 18.6 per cent of the value of the car for combustion vehicles or 9.3 per cent for HEV hybrids, HEV soft hybrids and PHEV plug-in cars.

You have 14 days from the conclusion of the sales contract to fill in the relevant declaration, and you have 30 days from the moment the car was imported into Poland to pay the tax. You can either go to the tax office in person or submit the required documents online.

Payment of the excise taxis necessary if you want to register in Poland a car imported from the USA. What's more, if you fail to comply with the obligation on time, an employee of the tax office will summon you to pay the arrears and charge you penal interest. It is worth bearing this in mind when purchasing a car from the United States..

What do you need to do after buying a car from the US? A brief overview of the necessary formalities

Passenger carsfrom the USA are very popular among motoring fans in Poland. One of the factors encouraging people to buy a vehicle from the United States is itsattractive prices. Potential buyers are also attracted by the availability of models that are hard to find on the European market, as well as their extensive equipment. However, once a car is purchased from the USA, the new owner must comply with certain formalities. Otherwise, he/she will not be able to register the vehicle and thus will not be able to drive it legally on the road.

The basic point to remember is that the car is taxable in Poland. Any attempts to avoid paying fees to the state will fail. The tax office officials will sooner or later detect irregularities. Therefore, assume from the outset that buying a car is only the first expense that awaits you in connection with importing a vehicle from the USA. What to bear in mind?

Before registering your car, you must pay:

• duty - across the EU this is 10% and is charged on the value of the car and the cost of transporting it,.
• VAT - the amount of VAT depends not only on the value of the vehicle, but also on which European country the car imported from the USA first arrives in. In Poland, for example, cars imported from the US are subject to 23 per cent VAT. In the Netherlands, on the other hand, it is 21 per cent.
• The excise tax does not apply only if you have decided to buy an all-electric or hydrogen-powered car..

Buying a car from the USA - what else to bear in mind in connection with car registration?

Buying a carfrom the US also involves formalities other than paying VAT, customs and excise duties. What else do you need to bear in mind before you go to the Department of Motor Vehicles to register a car imported from the United States?

1. Translate documents. For cars from the US, the Department of Motor Vehicles requires all related documents to be translated by a sworn translator..
2. Make the necessary changes to your car. Vehicles from the USA have a slightly different design than European models. For this reason, certain changes need to be made to them in order for them to run on Polish roads..
3. Do a technical inspection of the vehicle. The car must be approved by a diagnostician in order to be registered..
4. Purchase third party liability insurance. If the car does not have a valid third-party liability policy, it will not be registered..

In summary, car purchase tax (PCC tax) does not apply if the car was outside Poland at the time of purchase and the transaction took place outside Poland. However, this does not mean that the new buyer does not incur any charges to the state. He must pay excise duty, VAT and customs duty. He must also not forget to complete other formalities. Otherwise, he will not register the car.