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Car exchange agreement, i.e. what formalities are required for car exchange
(photo Moje Auto)
You can buy the car for cash or exchange it for another one. According to the provisions of civil law, we treat the exchange of cars as a sales contract. However, we give up the remuneration in the form of money and choose the equivalent in another vehicle. This means that exchanging a car does not exempt the seller and buyer from completing specific formalities. An agreement is signed between the owners of both cars, under which they take over each other's previously used cars.
From the article you will learn:
- How to create a car exchange agreement
- What taxes both parties have to pay
- Is it worth it? car exchange at a commission shop
Car exchange – contract step by step
Car exchange agreement is structured similarly to a typical purchase and sale agreement. It should be prepared in two copies - for both parties to the transaction. It can be divided into two main parts. The first concerns the people who enter into it. The contract must include the personal data of the vehicle owners, their residential address, PESEL number and ID card number. The second part of the contract focuses on the objects of the transaction themselves. It is a description of the cars, in particular the make, year and registration number. In some situations, the parties also decide to include an identification number. Car exchange agreement it must also contain accurate information about the value of both cars. If one vehicle is more expensive than the other, it is possible car exchange with an additional fee. The owner of the cheaper car agrees to pay the price difference in cash. The contract also includes vehicle equipment and all documents that we provide to the new owner.
Passenger car exchange forces the parties to the transaction to pay civil law tax. Therefore, you need to decide which of them will fulfill this obligation. The best and fairest solution is to divide the tax equally. Therefore, each party is charged with the additional costs in the same way. This information must also be included in the contract.
Income tax
If we sign a contract under which it is made car swap, then the exchange is taxable. Natural persons who do not run a business are obliged to pay both income tax and tax on civil law transactions. We settle income tax only when we own the car for less than half a year. According to the law, you must present your income to the office. It is the difference between the income resulting from the sale of the vehicle and the cost of purchasing the car. However, the differences can be reduced. Car owners very often decide to purchase spare parts and make any repairs. Documenting them will reduce or even completely eliminate the difference between income and costs. Car exchange however, it does not always require the payment of income tax. The exemption from this obligation applies to vehicles whose value does not exceed PLN 2280.
Tax on civil law transactions
Car exchange in addition to paying income tax, it forces both parties to the transaction to pay tax on civil law transactions. Its value is 1% of the item's value. In the case of damaged vehicles, it is possible to lower the value of the car, which means paying lower tax. However, this requires documenting the defect and presenting photos and a cost estimate to the office. However, it may turn out that the official will impose a different amount to be paid, but you have the right to appeal against this decision. The money must be transferred to the account of the new owner's office within the agreed deadline. If this does not happen, there is a chance that the Tax Office will impose a fine on the exchange parties, up to several thousand zlotys.
Car exchange at a commission shop
The popularity of car swaps as an alternative to purchasing a vehicle for cash has led to the fact that second-hand car dealerships also offer such a transaction as part of their services. Car exchange at a commission shop proceeds in a similar way as between persons who do not run a business. An appropriate contract is also concluded, under which the car is handed over to the dealership and another car is collected from it. It is also possible in this case car exchange with an additional fee. The big advantage of such an offer is the flexibility in choosing a "new" car, as well as the security of the transaction and possible support in completing formalities after the exchange.
Summary:
- Car exchange agreement has a similar form to a typical purchase and sale agreement. It contains personal data of both parties, as well as detailed data of the exchanged vehicles. Income tax should also be taken into account.
- We settle income tax only when we own the car for less than half a year.
- Owners of cars whose value does not exceed PLN 2280 are exempt from income tax.
- The tax on civil law transactions is 1% of sales. When exchanging cars, it is paid by both parties to the transaction.
- When you decide to exchange your car at a dealership, you have a chance to get a good, proven car by getting rid of your "old" one. You can also count on the help of specialists in completing the formalities.
