Entrepreneurs in Slovenia can do a car purchase as an investment to do business in Europe. If this really pays off is a more complicated question. When is a car purchase a good investment for your business in Slovenia?
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Does the car purchase make sense based on the activity you do?
If your business is doing an activity that requires a company car, buying a car is a normal choice. If not, the profitability of the purchase is most likely hidden in the calculation of the taxation and maintenance.
When can you use a company car for private purposes?
At first glance, the car purchase seems to be the best solution. This is because you can then use the car for both business and private purposes. But even in this case, you will have to keep records of the distances traveled over the travel order. You will always have to have a travel order when you use the car of the company. Also you will have to prove the number of kilometers driven for both purposes. Based on this, the expenses that are tax-deductable will also be adjusted.
Employees who will use a company car for private purposes will have to pay a monthly fee and pay the contributions and personal income tax accordingly.
Car purchase: yes or no – financial capabilities of the company
If a company finds itself in a situation where it has the funds to buy a vehicle, the decision to do so is definitely easier. But even if this is not the case, there are alternatives.
In addition to the currently low interest rates for taking out a bank loan, of course, leasing is also available, and this alternative is also worth considering. Also the choice between financial and business leasing or renting is often more complicated in practice, as you need to anticipate the way of doing business that you will have for the duration of owning the vehicle. Our tax and accounting experts can consult you in this regard as well.
A car as a business investment or as a business expense
However, if a company buys a car, it cannot claim a tax relief for the purchase of the vehicle. However, this is not always the case. The exceptions apply to the car purchase of a car with a hybrid or electric drive and which is friendly to the environment.
It is best to consult with an accountant before the purchase. Also as to what level of relief you can claim to in relation to the car purchase, if and when the VAT deduction is available and what expense can the company claim for it.
Even if a company-owned car is used for private and for business purposes, company costs may be calculated on it:
- Depreciation (maximum annual depreciation rate is 20%)
- Maintenance
- Registration
- Servicing
What if an individual owns the car?
In the event that the vehicle belongs to a natural person who works in the company and they use it for business purposes, you can use the maximum (non-taxable amount) of EUR 0.37 per km for the expense.
How to obtain EU Blue Card in Slovenia/EU?
Where in the car purchase process can you rely on an accountant’s support?
In addition to posting travel orders, doing the depreciation and other accounting tasks related to the car purchase, our experts at DATA d.o.o. can offer the tax advice whether it is best to own a car as a natural person or as a business. Our legal experts can prepare a sales contract. They can also explain the rules for the use of a car of the company.
Do you need help with your business in Slovenia, EU? Contact DATA for support!
Do you plan to start a business in Europe? Do you also want to learn more about the car purchase as an investment in Slovenia? Send us an email to data@data.si. You can also call us on +386 1 6006 270/+386 1 6006 274 (our landline). You can also use our Viber/Whatsapp +386 40 530 718/+386 64 173 023. We are also available on skype data.business7. Also, you can follow us on Facebook. You can attend our webinar on company registration in Slovenia.
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