Mixed use in the case of a micro-enterprise (case)

Situation:

What is the fiscal treatment of fuel expenses (including documents) in the case of a company (ABC SRL), paying VAT and income tax to micro-enterprises?

Until December, ABC uses a car only for the purpose of economic activity. From January 2021, the company uses a mixed regime car.

Solution:

 

Given that the car is used in a mixed regime, the company will no longer have to prepare roadmaps, but the VAT deductibility is limited to 50%.

If the company were a profit tax payer then the 50% limitation would also apply in case of deductibility of expenses.

In the case of a micro-enterprise, the nature of the expenditure is irrelevant. Thus, in the case of micro, this limited deduction applies to VAT related to all expenses allocated to the respective car, not only for fuel expenses (repairs, maintenance, fuel, etc.).

In this sense, at point 68 par. (4) of the Methodological Norms given in the application of articol 298 of the Fiscal Code states very clearly that, if the vehicle is used both for economic activity and for personal use, it is limited to 50% the right to deduct the tax related to the purchase, intra-community acquisition, import, rent or lease and the related tax related expenses. The taxable person who applies the 50% limited deduction does not have to prove the use of the vehicle for the purpose of economic activity or for personal use with the help of the roadmap. By limiting to 50% the right to deduct the tax related to the purchase, intra-community acquisition, import, rental or leasing of motorized road vehicles and the tax related to the expenses related to these vehicles, it is limited the tax deduction that would be deductible under the conditions provided in articol 297 and articol 299 – 301 of the Fiscal Code.

Moreover, if the car was considered a capital good at the time of acquisition, and the 5-year adjustment period has not ended, then the adjustment of the initially deducted 100% VAT according to article 305 of the Fiscal Code will be needed, taking into account that it is a change of destination, from exclusive use for economic purposes, to mixed use, both for economic purposes and for personal purposes.

Given that ABC SRL wants the full deduction of VAT, then the car must be used exclusively for economic purposes, with the mandatory preparation of roadmaps.

We remind you that starting with January 1, 2021, an amendment to the Fiscal Code (by Law 296/2020) applies to employees of micro-enterprises, in the sense that non-taxable income and benefits in the form of personal use of vehicles that are not used exclusively are considered for the purpose of economic activity, owned or used by legal entities applying the tax regime of micro-enterprises or the tax specific to certain activities (Article 76 paragraph (4) letter t 1) of the Fiscal Code), unlike the legislation prior to 01.01.2021, when such a provision does not exist for the employees of micro-enterprises.

That said, if after January 1, 2021, the micro-enterprise no longer prepares roadmaps for the car and uses the car in proportion of 50% for personal purposes, the amount will no longer be treated as a taxable salary advantage for the employee who operates the car.

Legal basis:

  Fiscal Code (approved by Law no. 227/2015, published in the Official Gazette no. 688 of 10.09.2015), with subsequent amendments and completions;

Law 296/2020 for the amendment and completion of Law no. 227/2015 regarding the Fiscal Code

Methodological Norms for the application of the Fiscal Code (approved by HG no. 1/2016).