STIs Shake Up Businesses That Have Purchased Luxury Cars: Family Members Drive, But Managers Look For Ways To Escape

In the country 41 thousand. the companies have around 118 thousand cars, an average of three each. Are all cars really just for company activities? For the budget to begin to be replenished, it was enough to send questions to the STI.

Currently, the STI operates in several directions. The first initiative is to explain in good faith the purpose for which companies use the cars. The STI sent 18.6 thousand. questionnaires. Half of the companies have already submitted responses: 7.7 thousand. Companies have not previously calculated that employees or others would receive personal benefits, that is, income in kind. 15 percent of companies have confirmed that they use cars for private purposes.

After sending the questionnaires to more than 2.5 thousand. the companies independently reviewed their statements and also declared 445 thousand. VAT EUR, 83 thousand. euro of personal income tax ”, – shares the STI.

The STI went even further: 190 companies were selected, which in the last three years acquired more than 50 thousand. Euro cars – a total of 511 vehicles. More than half of these companies were included on the COVID-19 pandemic victim lists before purchasing cars and were able to benefit from a variety of support.

Follow-up and control actions have been initiated for them, and as a result, 84 taxpayers have already declared an additional 0.54 million. taxes in euros.

It turns out that the companies used 266 cars for personal purposes, but only 15 percent. the companies calculated the income in kind.

“In the first place, the STI seeks to encourage companies to self-assess the current situation and draws attention to the risks identified in their company related to the use of the car for private purposes. Unfortunately, interviews don’t always bring tangible benefits; some taxpayers who do not calculate income in kind continue to provide false information, ”laments Vaimira Jakienė, director of STI’s Large Taxpayers Consulting and Monitoring Department.

Unexpectedly, criminals include large companies that claim to value their reputations, are audited by major international auditing firms, even list their shares on a stock exchange, and companies claim extreme transparency. It is regrettable, however, that according to the Tax Administration Law, the ITC of these companies cannot be made public.

Earlier, Mykolas Majauskas, chairman of the Seimas Budget and Finance Committee, drew attention to the fact that companies have bought luxury cars and are using state aid at the time. He asked STI to find out if the luxury property is not being used for private purposes or if tax deductions and state support are being misused.

Shocking examples: argues Porsche is for work, but fines go to spouse

STI shared examples that even supercar companies are trying to show that all of this is for company activities.

A publicly traded manufacturing company owns more than 170 cars. According to the company, all cars are used solely for economic activities and so far no income in kind has been calculated for any car.

STI Visited: The company explained that it had arranged a discussion with employees about the use of cars for personal purposes, during which a decision was made to provide opportunities for employees to use cars for work and their personal needs. These changes are expected to take effect from August. and taxes will be reported for the first time in September.

The company’s offer did not convince the STI.

“The information available to the STI shows that the cars have been used for private purposes in the past, which is clearly visible in the records of the Registry of Administrative Offenses. Ex.

With a car worth more than 100,000. Eur and who is assigned to another manager, violations were recorded for his spouse and child, who are not employees of the company on weekends or holidays.

Another car worth more than 100,000. Eur, which is assigned to the manager, in 2021. Up to 54 speeding offenses were recorded, including on weekends, and some of them were also committed by members of her family.

“From the information we have, we could conclude that this company, based on the cars used by employees for personal purposes, generates around 160 thousand. Taxes payable in euros that have not been declared and paid, ”shared V. Jakienė.

Another case is that the official representative of an international company uses about 40 cars, but the income in kind is not calculated for any of them.

STI was interested in the 7 most luxurious cars with a total value of 750 thousand. EUR: cars are assigned to the CEO, to managers. In most cases, the people who used the cars or their spouses did not have cars registered in their own name.

“The records of the registry of administrative infractions for the use of these cars are very colorful, the infractions were registered on weekends, holidays and family. However, during the first conversation, the company tried to convince that the cars are used only for economic activities, ”says V. Jakienė.

After that, the company changed its mind, reported that an inspection and review of the entire car fleet is underway to find out whether the cars are used for personal purposes, and started a meeting with the STI.

During the second meeting, the company representatives changed their minds and reported that they would calculate the income in kind for 9 cars, but only from July. The STI is not satisfied with such an offer, as there is evidence that the cars have been used before, ”V. Jakienė shrugged.

The third example is a transportation company. Here, the CEO, the Purchasing Director, the Marketing Director and the Chairman of the Board are each assigned a car, each worth more than 100,000 euros, to perform official functions. As in previous cases, the income in kind has not been calculated for any cars, although neither the managers nor the spouses have cars registered in their own name.

“The company reacted fairly quickly and calculated the in-kind revenue for 10 cars over a period of 1.5 years from the start of the pandemic,” shared V. Jakienė the result.

He mentions that there was another company that did not calculate taxes for any cars, but commissioned a very luxurious set for a Porsche car, the value of which was only 60 thousand. euros.

“The company has given an explanation that it does not use this type of vehicle for private purposes either, since it always travels alone to and from work to meet with clients. We could name more similar cases,” sighs the STI representative.

STI complains: “there will be nothing left”

So far, STI has been kind to businesses, but not for long.

“In summary, it can be said that companies that do not agree to cooperate with the tax administrator in good faith will have no choice but to initiate control actions,” promises V. Jakienė.

Not all companies declare additional taxes, avoid looking at the previous year.

“After contact with STI, there is a delay in the decision-making of companies or companies are trying to trick them into deciding when to start calculating taxes, instead of simply evaluating when the car was used for private purposes. This raises the question of the liability of audit firms conducting company audits, ”says V. Jakienė.

How is the automobile employee benefit calculated?

STI shares the fact that most companies calculate the in-kind benefits an employee receives by applying a value of 0.75 percent of the car’s market value.

For example, if a business provides an employee with unrestricted use of a car with a market value of $ 30,000. and covers fuel costs, the value of said income amounts to 225 euros per month (30 thousand euros multiplied by 0.75 percent). Personal income tax and social security contributions calculated on said income are usually around € 90 per month.

If the car is more expensive, let’s say its market value is $ 50,000. The value of the income in kind would be 375 euros per month, respectively, with about 150 euros to be paid in contributions from GPM and Sodra.

Of the 156 large companies that own 5,169 cars, about 60 percent (92 companies) accounted for $ 4.7 million in the first half of this year alone. Income in kind in euros for 2343 cars. 64 companies did not calculate such income.