Purchasing a car for your business as a private trader

Are you planning to purchase a vehicle or have bought one already for business use? Adding a vehicle to your accounting is easy as we just need the the vehicle's bill of sale or invoice of the purchase. The purchase document must show the information of ownership, the car's registration number, price, and date.

If you purchase a vehicle for your business, you can add the price of it to your accounting and we will automatically add it to your expenses annually. After this you can add any car expenses to your accounting and start using the driving log. Read more about adding a car to your accounting here!

When buying a vehicle for your business, remember to take note of the following:

What kind of car or vehicle are you purchasing?

Whether the car you purchase is a passenger car or a van affects how tax deductions work. If more than 50% of the driving done with a van is for business purposes, the VAT on its expenses can be deducted in the taxation of your sole proprietorship. VAT cannot be deducted for a passenger car unless the car is a taxi, registered for driving instruction, or purchased for resale.

Buying a vehicle from a private person?

• If you bought a vehicle from a private person who has used it only privately (no business use of which they could have applied for tax deductions) the VAT is not added to the selling price and therefore you cannot deduct VAT of the purchase either in your business taxation. Always remember to fill out and sign a purchase agreement when buying a vehicle, even if you are dealing with a private individual.. 

   

  Buying a vehicle from a car dealership or from another entrepreneur?

• When you buy a vehicle from a car dealership or from another entrepreneur, it has usually been used for business purposes before of which the previous owner(s) could have applied for tax deductions. If you're purchasing a van, a taxicab or a vehicle registered for driving lessons, you can deduct the VAT of the selling price in your business taxation. When buying from a dealership, the purchase agreement will state if the purchase is valid for VAT deductions or not. 

   

  What kind of documents do you need?

• After purchasing a vehicle for your business, add the bill of sale to your UKKO account. Any possible VAT and other tax deductions are applied for according to the information on the bill of sale. Then you can add other car expenses to your accounting according to the general book keeping regulations. You can read more about vehicle expenses and their deductions here!