General Rule Under the Tax Code (art. 25 para. (1) and (2) of Law no. 227/2015), only expenses incurred for the purpose of carrying out the economic activity are deductible. Therefore, the question becomes: can the company justify the use of the vehicle for its own economic activities and, implicitly, the related expenses (RCA, CASCO, fuel, repairs, etc.)?
Conditions for Deductibility For RCA and CASCO to be deductible:
- There must be a written loan-for-use (comodat) agreement that clearly stipulates:
- that the car is provided for free use to the company;
- that it is used for the purpose of carrying out the economic activity.
- The car must actually be used in the company’s activity (not exclusively for personal purposes).
- Expenses must be justified by documents (invoices, policies, payment orders, etc.) and correctly recorded in accounting.
Level of Deductibility
For corporate income tax:
- RCA and CASCO expenses are deductible in proportion to the use for economic activity purposes.
- If the car is also used for personal purposes, the limited deductibility of 50% applies (pursuant to art. 25 para. (3) lit. l of the Tax Code).
For VAT (if applicable):
- VAT deductibility is also 50%, if the car is not used exclusively for professional purposes (art. 298 of the Tax Code).
Important
- Even if the car is not owned by the company, expenses can be deductible if there is a legal right of use (comodat) and the use is in the company’s interest.
- However, RCA/CASCO policies must be issued in the name of the owner (the individual or legal entity that is the lender), and the company can record the invoice in its accounts only if it actually pays the insurance and there is a clause in the comodat agreement that allows these costs to be borne by the company.
Conclusion Yes, RCA and CASCO can be considered deductible expenses even if the car is not owned by the company, provided that:
- a valid comodat agreement exists;
- the car is used for the company’s business activity;
- supporting documents exist;
- and the limited 50% deductibility rule is applied, if use is not exclusively professional.