Polish tax proposals could harm RVs

November 10, 2016

Radical proposals to overhaul the Polish car tax system could threaten the stability of residual values.

Under the current tax system, the annual rate of vehicle excise duty is based on engine size and the value of the vehicle declared by the owner, rather than its actual value.

Owners tend to understate the actual value of their vehicles to keep taxes low.

The proposals intend to end this practice by introducing a new system that uses engine size and the car’s year of production as the basis for tax calculations. An environmental element would also be introduced, based on European standards, such as whether a vehicle is Euro 6 compliant.

As a result, cars will be taxed more accurately, which could mean tax rises for some models, which in turn could harm their residual values as they become less popular. The new tax is expected to have the most impact on premium and imported models.

There will potentially be a cascade effect, as falling residual values for older, larger premium brands would push down values for smaller models in a brand’s range.

The proposals are currently being reviewed by the Polish senate, but require the approval of both houses of parliament to become law.

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