What Taxes Need to Be Paid When Transferring a Company's Used Car to an Individual?
3 Answers
The transfer of a company's car to an individual requires payment of value-added tax (VAT). The company's car is considered a fixed asset of the company. Transferring it to an individual constitutes a change in the ownership of the fixed asset, which is subject to taxation. According to China's tax laws: 1. Tax Rate: Starting from January 1, 2002, taxpayers selling their used fixed assets, whether they are general VAT taxpayers or small-scale taxpayers, are subject to a VAT rate of 4% with a 50% reduction, and input VAT cannot be deducted. 2. Tax Rate Conditions: If taxpayers sell used motor vehicles, motorcycles, or yachts that are subject to consumption tax and the sale price exceeds the original value, VAT is levied at a 4% rate with a 50% reduction. If the sale price does not exceed the original value, VAT is exempt. 3. Used Car Dealers: Used motor vehicle dealers selling used cars, motorcycles, or yachts are subject to VAT at a 4% rate with a 50% reduction.
As the veteran driver in our company's fleet, I've handled several cases of transferring company vehicles to private ownership. When our company sells vehicles to individuals, it mainly involves value-added tax (VAT), with significant differences depending on the taxpayer type. If you're a small-scale taxpayer, VAT is levied at a 3% rate but reduced to 2% for payment. For general taxpayers, invoices are issued at 13%, though vehicles purchased before August 2013 can opt for simplified taxation at 2%. Don't forget the VAT surcharge, which is typically 12% of the VAT amount. The difference between the vehicle's assessed value and selling price must also be included in the company's profits for corporate income tax purposes. Last time when our old Passat was transferred to the sales manager, the finance department specifically reminded us to bring the organization code certificate and company seal to the tax office for invoicing, otherwise the vehicle management office wouldn't process the transfer.
From a financial perspective, the transfer taxes and fees are mainly divided into three parts. For the VAT portion, remember to distinguish the nature of the taxpayer: small-scale taxpayers are subject to a 3% reduced to 2% levy on the used car sales amount; general taxpayers need to issue special invoices at the applicable tax rate, but for used cars, they can opt for simplified taxation. The second part is the VAT surcharges, including urban construction tax (7% of VAT), education surcharge (3%), and local education surcharge (2%). The third part is the gain or loss on asset disposal—the difference between the vehicle's selling price and its book value must be included in the current period's profits and subject to corporate income tax. I recommend first obtaining an appraisal report from an assessment agency to determine the transfer price and avoid tax disputes. By the way, individual buyers also need to pay a deed tax of 0.5% of the appraised value, which is often overlooked.
