Isaac is the manager of the company Resolvemais, Lda. and, in the development of his professional activity, he has the constant need to use a means of transport to travel to his customers.
To this end, Isaac chose to purchase a light passenger vehicle and, in accordance with the conditions of his company, set the purchase limit for it at 30,000 euros.
Thus, in a comparative scope, let us see the gains obtained by choosing a vehicle powered exclusively by electric energy compared to hybrid vehicles and those powered by conventional fuels.
Let's admit the fixed value of 30 thousand euros and consider as options:
- A vehicle powered by diesel;
- One powered exclusively by electricity; and
- A plug-in Hybrid car.
Diesel powered vehicle
If Isaac opts for a vehicle running on diesel, he will only be able to consider the value of 25 thousand euros as a tax cost, "losing" in this way the deduction of 5000 euros and will not be able to deduct, at the tax level, any amount related to VAT.As for the autonomous taxes on the vehicle, it will be subject to a rate of 27.5%, if it shows a profit, that is, it will have to pay around 8250 euros referring to taxes. If your company presents a loss, this tax will be increased by 10%, and you will have to pay around 11,250 euros.
| Diesel car | ||||
|---|---|---|---|---|
| Acquisition value | Acquisition value accepted as tax cost | deductible VAT | Taxes on the vehicle | |
| Profit | Loss | |||
| €30,000 | €25 000 | 0 € | 8250 € | 11 250 € |
Vehicle powered exclusively by electricity
Alternatively, if Isaac chooses a vehicle powered solely by electricity, for the same amount, he may consider the total acquisition cost in his company's accounting.
You will be able to deduct the total value of the vehicle's VAT and you will not have to pay any tax on the purchase of the vehicle, regardless of your company's results.
| 100% electric vehicle | ||||
|---|---|---|---|---|
| Acquisition value | Acquisition value accepted as tax cost | deductible VAT | Taxes on the vehicle | |
| Profit | Loss | |||
| €30,000 | €24,390.24 | €5609.76 | 0 € | 0 € |
Plug-in Hybrid Car
Finally, Isaac also has the option of opting for a plug-in hybrid vehicle in which, keeping the same purchase price, you can consider as cost the entire purchase price of the vehicle deducted from the VAT value, as you have the possibility to deduct VAT from the purchase thereof.And, despite being subject to vehicle taxation, this will be lower, when compared to the taxation of a vehicle running on conventional fuels, by around 22.5%.
Therefore, the taxation on the acquisition of the vehicle will, in this case, be 5%, which corresponds to around 1219.50 euros, less around 7030.50 euros when compared to a vehicle powered by conventional fuels. If the company presents a loss, this taxation will be increased by 10%.
| Plug-in Hybrid Car | ||||
|---|---|---|---|---|
| Acquisition value | Acquisition value accepted as tax cost | deductible VAT | Taxes on the vehicle | |
| Profit | Loss | |||
| €30,000 | €24,390.24 | €5609.76 | €1219.51 | 3658.54 € |
Conclusion
After confronting his options, Isaac verified the following:
| Car | deductible VAT | Cost accepted fiscally | Tax payable — TA | IRC deduction | Effective gain on IRC | Tax Effect (IRC+VAT) |
|---|---|---|---|---|---|---|
| Diesel | 0 € | €25 000 | 8250 € | €5,000 | −3250 € | −3250 € |
| 100% electric | €5609.76 | €24,390.24 | 0 € | €4878.05 | €4878.05 | €10,487.80 |
| plug-in hybrid | €5609.76 | €24,390.24 | €1219.51 | €4878.05 | 3658.54 € | €9268.29 |
From a fiscal point of view, the option for a diesel-powered vehicle is clearly the least favorable.
Effectively combining the simultaneous effect of VAT and IRC, the plug-in hybrid and electrical options allow Isaac's business to make significant savings.
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