VAT on the purchase of a car in: we analyze all the nuances for individuals and legal entities

Buying a car is not only about choosing a model and configuration, but also about complex tax issues. One of the key points that often causes confusion is - value added tax (VAT) when purchasing a car. In 2026, tax rules have changed, and it is now important to understand who exactly pays VAT, how it is calculated for new and used cars, and whether it can be returned or avoided.

Many buyers mistakenly believe that VAT is an additional burden that they bear when purchasing a car. In fact, the mechanism by which this tax works depends on the status of the buyer (individual or legal entity), the type of transaction (purchase and sale, leasing, import) and even on the country of origin of the car. In this article we will analyze in detail all the relevant nuances, including Features of taxation of electric vehicles and used cars, and also give practical recommendations on how to minimize tax risks.

What is VAT and why is it important when buying a car?

Value added tax (VAT) is an indirect tax that is included in the price of most goods and services. In the case of cars, it can be 20% from the price of the car, but only under certain conditions. The main rule: VAT is not paid directly by the buyer, but by the seller (dealer, car dealership or private individual), who then transfers it to the budget. However, in some cases, the tax burden also falls on the buyer - especially when it comes to legal entities or the import of cars.

Why is this important? Because incorrect execution of the transaction can lead to:

• 🔹 Double taxation - when VAT is paid by both the seller and the buyer.
• 🔹 Problems with deductions — if a legal entity cannot offset VAT in expenses.
• 🔹 Fines from the tax office - if the tax amount is incorrectly indicated in the agreement.

For example, if you buy a new car from an authorized dealer, VAT is already included in the price and you will not see it as a separate line. But when importing a car from abroad or purchasing from a legal entity, the mechanism may differ.

VAT rates on cars in 2026: new vs used cars

In 2026, the following VAT rates on cars will apply:

Vehicle type	VAT rate	Who pays	Features
New cars (domestic)	20%	Seller (dealer)	Included in the price, the buyer does not see separately
New cars (imported)	20%	Importer or buyer (for self-import)	Additional charges may apply recycling fee
Used cars (sold by individuals)	0%	Not paid	An exception is if the seller is an individual entrepreneur on OSNO
Used cars (sold by a legal entity)	20% or 10%	Seller	Depends on the company's tax scheme
Electric cars and hybrids	10%	Seller	Preferential rate until 2027

An important nuance: if you buy a used car from an individual, VAT is not paid at all. But if the seller is a legal entity or individual entrepreneur on the general taxation system (OSNO), then the tax will be included in the price. This often becomes a cause of disputes, especially when buying cars from car dealerships that sell trade-in cars.

Valid for electric vehicles and hybrids preferential rate 10% instead of the standard 20%. This rule was introduced to stimulate the market for environmentally friendly transport and was extended until 2027. However, it is important to clarify whether a particular model falls into this category - some hybrids with a small battery capacity may not qualify as "eco-friendly".

Who pays VAT when buying a car: individuals and legal entities

The VAT payment mechanism greatly depends on who buys the car - an individual or a company. Let's consider both cases.

For individuals

If you are buying a car for personal use, then:

• 🔹 Upon purchase new car At the dealer, VAT is already included in the price. You don't see it separately, but you pay indirectly.
• 🔹 Upon purchase used car Individuals do not pay VAT.
• 🔹 When importing a car from abroad, you become a VAT payer (20%) + customs duties.

Individuals cannot refund VAT when buying a car, even if the car is used for business purposes (for example, for a taxi). An exception is if an individual is registered as an individual entrepreneur on OSNO.

For legal entities and individual entrepreneurs

Companies and entrepreneurs on the general taxation system (OSNO) can:

• 🔹 Credit VAT as a tax deduction if the car is used for business purposes.
• 🔹 Don't pay VAT when purchasing from an individual (if the seller is not a VAT payer).
• 🔹 Refund VAT when importing a car if it will be used in activities subject to VAT.

However, there are pitfalls. For example, if a company buys a car for the personal use of the director (not for business purposes), then VAT cannot be deducted. It is also impossible to offset the tax if the car was purchased from an individual - in this case, VAT is simply not paid.

What to do if the seller-legal entity did not allocate VAT in the contract?

If the seller (for example, a car dealership) does not indicate VAT as a separate line in the contract, this does not mean that there is no tax. By default, the price is calculated including VAT, and you have the right to request that the document be adjusted. Otherwise, the tax office may have questions when trying to accept VAT as a deduction.

How to return VAT when buying a car: step-by-step instructions for legal entities

Legal entities and individual entrepreneurs on OSNO can return the VAT paid when purchasing a car if the car is used in activities subject to this tax. To do this you need:

Correctly executed purchase and sale agreement with allocated VAT|Invoice from the seller indicating the amount of tax|Payment documents (bank statement, receipt)|Car acceptance certificate|Registration documents for the car (PTS, STS)-->

The refund process looks like this:

1. Receive from seller invoice with allocated VAT.
2. Register your invoice with shopping book.
3. Enter the amount of VAT to be deducted in tax return for VAT for the corresponding quarter.
4. Submit your return to the tax office.
5. Wait desk audit (may take up to 3 months).

Important: the tax office may request additional documents confirming that the car is actually used for business purposes. For example, if a car was purchased for a taxi, agreements with aggregators will be required (Yandex.Taxi, Gett) or waybills.

⚠️ Attention! If the car is purchased on lease, the VAT refund mechanism is different. In this case, the deduction is made as lease payments are paid, and not at a time.

VAT when importing a car: how not to overpay

If you import a car from abroad (for example, from Europe, Japan or the USA), you become a VAT payer regardless of your status - even if you are an individual. The rate is 20% from the customs value of the car, which includes:

• 🔹 Price of the car according to the contract.
• 🔹 Delivery cost to the Russian border.
• 🔹 Customs duties (if applicable).

In addition to VAT, when importing a car, the following may be charged:

• 🔹 Customs duty (0% to 48% depending on country of origin and engine type).
• 🔹 Recycling fee (from 20,000 to 700,000 rubles depending on the age and type of car).
• 🔹 Excise tax (for vehicles with engine power over 90 kW/122 hp).

To minimize your tax burden, you can:

• 🔹 Select a car from a country with which Russia has an agreement preferential treatment (for example, Belarus, Kazakhstan, Armenia).
• 🔹 Register the car as a legal entity in order to then accept VAT for deduction.
• 🔹 Take advantage benefits for electric vehicles (reduced VAT rate of 10% and no recycling fee).

Calculation example for import Toyota Camry 2020 from Japan:

• Car price: 2,500,000 RUR
• Customs duty (15%): RUB 375,000
• VAT (20% of 2,500,000 + 375,000): 575,000 ₽
• Disposal fee: RUB 150,000
• Total payable: 3,500,000 ₽ + 575,000 ₽ (VAT) + 150,000 ₽ = 4,225,000 ₽

⚠️ Attention! If you are importing a car older than 3 years, the customs value is calculated not according to the market price, but according to customs directories. This can significantly increase the VAT amount.

Typical mistakes when registering VAT and how to avoid them

Many buyers and sellers make mistakes when preparing documents, which later leads to problems with the tax authorities. Here are the most common of them:

1. Incorrect indication of the VAT rate in the contract. For example, the seller indicates 0%, although he should use 20%. This may become the basis for additional tax assessment.
2. No invoice. Without this document, a legal entity will not be able to deduct VAT.
3. Purchase from an individual with subsequent deduction of VAT. VAT is not paid on transactions between individuals, so it cannot be offset.
4. Incorrect registration of imported cars. For example, understating customs value to reduce VAT can lead to fines.

To avoid problems:

• 🔹 Always check Is VAT highlighted as a separate line? in the contract and invoice.
• 🔹 When purchasing from a legal entity, please request a copy of the tax registration certificate (to ensure that the seller pays VAT).
• 🔹 If you are buying a car for business, consult with an accountant in advance about the possibility of deductions.

VAT on cars in 2026: latest changes and forecasts

In 2026, several important changes regarding VAT on cars came into force:

• 🔹 Extension of benefits for electric vehicles. The 10% VAT rate is valid until 2027 (previously planned to be abolished in 2026).
• 🔹 Tightening import controls. Customs now more actively checks the undervaluation of cars during customs clearance.
• 🔹 New rules for leasing. Now VAT can be deducted as lease payments are made, and not only after the car is purchased.

What to expect in the future?

• 🔹 Possible VAT increase to 22% from 2026 (discussed by the government).
• 🔹Expansion of benefits for hydrogen cars (now they are equal to electric vehicles).
• 🔹 Simplification of the VAT refund procedure for small businesses.

If you're planning on buying a car in the coming years, it makes sense to expedite the deal to take advantage of current incentives. For example, buying an electric car in 2026 will cost less than in 2026 if the VAT rate actually increases.

FAQ: Frequently asked questions about VAT on cars

Is it possible to refund VAT when purchasing a taxi car?

Yes, if you are a legal entity or individual entrepreneur on OSNO and the car is used in activities subject to VAT. To do this, you need to provide a tax invoice from the seller and documents confirming the use of the car for business purposes (for example, agreements with taxi aggregators).

Do I need to pay VAT when buying a car from an individual?

No, if the seller is an individual who is not an individual entrepreneur. In this case, VAT is not paid. However, if the seller is an individual entrepreneur on OSNO, then the tax will be included in the price.

How is VAT calculated when purchasing a car on lease?

When leasing, VAT is paid in installments along with monthly payments. The leasing company highlights the tax on the invoice, and you can deduct it as you pay. After purchasing the car, no additional VAT is paid.

Is it possible not to pay VAT when importing a car?

No, import VAT is mandatory for everyone, including individuals. However, you can reduce the tax burden by choosing a car from a country with a preferential regime (for example, the EAEU) or registering the car to a legal entity for subsequent deduction.

What VAT rate applies to used cars sold by a car dealership?

If a car dealership sells a used car, it is required to charge VAT at a rate of 20% (or 10% for electric vehicles). An exception is if the salon operates under a special regime (for example, simplified tax system), but then the buyer will not be able to deduct VAT.