11. december 2020

Lease Agreements And Vat

In its judgment of 4.10.2017 (C-164/16, Mercedes Benz Financial Services), the ECJ considered that a clear decision had to be taken at the time of the contract`s conclusion. A delivery can therefore be considered to be made when the lease agreement provides for the transfer of ownership of the rented thing to the taker. If the user decides to purchase the car previously used after the termination of the rental agreement, the user is entitled to a new deduction limit. This is due to the fact that the sale/sale contract is treated by the tax authorities as a separate agreement from the lease agreement. In this case, the user is allowed to deduct VAT on the invoice that documents the purchase up to 60% of the tax collected, but no more than 6,000. The first condition can be considered fulfilled if the agreement contains an option to purchase the lease-related asset. In its draft circular, the BMF indicated that the judgment of the European Court of Justice was in conflict, to some extent, with the current assessment of VAT leases, in accordance with Section 3.5, paragraph 5, and (6) UStAE. That is why Section 3, paragraph 5, of the UStAE will be revised following the judgment of the Court of Justice. In addition, there are plans to extend the scope to leases. In the case of a cross-border provision to be used, if in doubt, the objective would be to allocate the rental object in accordance with the legislation of the other Member State.

If you want to know how lexology can advance your content marketing strategy, please email During the term of the lease, depreciation (made by the financing part under the operational lease and by the user under a financing lease) can only be charged on deductible costs in excess of 20,000 EUROS. Amortization of the partial value of a car, which exceeds 20,000 euros, should not be considered as such. In some cases, other depreciation methods and individual depreciation rates may be used. At the same time, a similar principle applies to insurance premiums. The insurance premium is a deductible cost only in the part that does not exceed 20,000 euros, while the remaining amount cannot be classified as such a cost. Please note that this could be the case for example. B if, under the agreement, if the option can be exercised, the sum of the contractual payments corresponds to the market value of the commodity, including the financing costs, and the tenant is not required to pay a significant amount because of the exercise of the option.