If you buy a car, you normally have no right to deduct VAT. Exceptions exist for, for example, taxi operations, car rental, funeral operations and driver’s license training. If you apply for a car purchase with loan financing in installments, it is still counted as a purchase and not as a lease, and no VAT may be deducted for the car purchase.
What is important to consider?
- Don’t forget that you cannot deduct the VAT for the car if you are evaluating which car the company can afford to buy. So, if the car costs SEK 200,000 plus VAT, the company must pay a total of SEK 250,000.
- A car is a fixed asset and not an expense, so the entire purchase price does not affect the profit for the year you buy the car. In the normal case, you depreciate a car over a five-year period. So, if the company makes a high profit then you won’t make a big tax cut because the profit is not reduced by the full amount of the car purchase.