In discussing this aspect of the problem as a tax issue when selling a car to an individual business owner, It is important to note that there are a few nuances in this case, and it is better to know beforehand and even before the legalization of the sale.
It is possible to learn the taxes that an individual business owner is required to pay when selling a vehicle and what deductions for property can be claimed as well as the relation between the number of commitments in the budget and what is the reason for using a technological method and the method to submit a declaration, and what penalties can be imposed for late submission, which you will learn from the article.
What taxes does an individual entrepreneur pay when selling a car?
For state entities, There is no significant distinction between transactions performed by an individual or an individual businessperson. In this scenario, dependent on the individual who acts as a seller, the type of payment to be made to the state’s Treasury will be decided.
When the purchase is conducted in an individual’s name, the VAT should be paid. If the vendor is a business and taxation is simplified, then a more straightforward system is used.
Furthermore, the budget of the state will also pay for:
Income tax rate of 13%, which applies to an individual and a sole proprietor who decide to dispose of the vehicle that was previously used only for personal use;
An individual businessperson must pay a VAT of 18% if the technology offered was used for the business.
If the simplified taxation system is selected, paying the fees above is not mandatory. In this instance, the individual business owner must include profits from the transaction into the base tax.
Car sales deduction
If we’re talking about the tax deduction on the property, it is only the individuals who have the right to this deduction when they pay the personal tax. The tax you pay is not the specified type of compulsory tax if:
The team verified that the price of selling a vehicle is lower than the purchase price. Another option is when the cost of the car has less than 250 million rubles.
The owner of the vehicle for more than three years.
Taxes and purposes for making use of the vehicle
THE PURPOSE OF USING THE VEHICLE BEING SOLD IS OF DECISIVE IMPORTANCE WHEN INDICATING THE TYPE OF FEE COLLECTED IN FAVOR OF THE STATE. IN THIS REGARD, THIS ISSUE SHOULD BE CONSIDERED IN ADVANCE.
If there is a sale of a vehicle for passengers by a business that is not involved in the transport or transport of persons, it would be feasible to prove the car was used for commercial reasons.
When there’s a transaction for the sale of buses or trucks, it would be hard to show that the vehicle was only used to serve personal needs. Therefore the amount is made with the same amount for an individual business owner.
The declaration is required when selling a vehicle.
If the transaction was successful and the businessperson completed either by hand or electronically, the form 3 personal income tax.
The declaration should be made at the Tax Office, not after April 30 of the year that follows the year that you sold the car. You can, however, make an application for a property deduction anytime.
It is suggested that you be aware of when the purchase was made. If the vehicle was registered on or after the 15th day of the month, then the month that the transaction was completed is considered when calculating the installment due. If the vehicle was registered before the 15th day, inclusively, then the month that is currently in effect is not counted.
Penalties for not submitting the declaration
ACCORDING TO RUSSIAN FISCAL LEGISLATION, AN INDIVIDUAL ENTREPRENEUR, IN CASE OF LATE SUBMISSION OF A FORM IN FORM 3 – PERSONAL INCOME TAX AND LATE PAYMENT OF THE FEE, PAYS THE STATE A FINE, THE MINIMUM AMOUNT OF WHICH IS 1000 RUBLES.
Additionally, as per Article 75 from the primary budget document of the country, if an application is not made in time and the tax amount owed for the fiscal year is not paid, the taxpayer has to pay an amount of 1/300 of the refinancing rates that is set by the Central Bank of the Russian Federation until the debt is paid in full.
In the end, it must be mentioned proper execution of the purchase and sale transactions along with the timely filing of an income tax return that includes the personal income tax of 3, and the timely payment of taxes will help you avoid paying unnecessary fees for penalties and will reduce time spent figuring issues with tax services.