Under applicable EU VAT legislation, the rental of goods can be considered either as a delivery of goods or as a provision of services. In principle, a rental agreement is considered a service, unless the rental conditions are comparable to the terms of a delivery of goods. First, the agreement must contain a clause that explicitly refers to the transfer of ownership of those assets from the lessor to the taker. An agreement may be considered such a clause if this agreement includes an option to purchase the lease-related asset. In the case of a lease agreement, 60% of the taxes and other payments on the leasing rate resulting from the contract were increased to 60%. The sum of the deductions for a vehicle must not exceed 6,000 PLN. The relevant criteria for the award of the item include the relationship between the duration of the non-resilient base rent and the average operating life, as well as the ratio of the purchase price to book value at the end of the rental period. According to paragraph 3.5, paragraph 6, paragraph 6, paragraph 1, of UStAE, leases within the meaning of paragraph 535 BGB with option to purchase are considered deliveries only on the day when the reciprocal will exists. The lessor charges a purchase price subject to VAT at the time of delivery. Rents paid by the taker up to that date generally remain classified in “other services.” If the rents paid previously are charged on the purchase price of the taker, there may be a retroactive change in the vat base. This distinction is important in determining, for example. B, the taxable base, vat due date, delivery location and billing requirements. It is therefore important to carefully assess the characterization of these VAT agreements.

The most recent case of Mercedes-Benz Financial Services UK Ltd (C-164/16) concerns the qualification of a lease agreement as the provision of services and the delivery of goods. A VAT invoice is issued for each rental agreement (own contribution, processing fee, leasing rate). On 4 October 2017, the European Court of Justice (ECJ) issued its judgment in the case of C-164/16 “Mercedes Benz Financial Services UK Ltd. ” on the criteria for determining whether a lease should be considered a delivery of goods or services for VAT purposes. The fact that the purchase of the car is formally optional is not sufficient, according to the ECJ, to treat a leasing product as a service. The principles of VAT deduction on HGVs are the same as for any other form of financing. The total amount of VAT (100%) are billed by leasing companies and the underwriter. This provision governs cases where the primary purpose of the insured`s activity is the resale or transfer to the paid use of vehicles (vehicles) under leases. This means that cfm companies have the right to deduct the total amount of VAT when buying a particular car.

Other companies that do not meet the above condition are allowed to deduct VAT, in accordance with the above principles, when purchasing vehicles and renting. Accounting practitioners took stock of their work in the processing of leasing transactions, as the concepts, guidelines and legislation relating to the classification of a lease as a leasing or operating lease under IFRS for SMEs and the VAT Act are not the same as those discussed in this series of five articles on leases. The articles also explained the accounting treatment of different leases and explained how VAT should be dealt with by the taker. Please note that the principles set out in the new circular apply to all outstanding cases, in accordance with the draft text. However, transactions executed prior to the BMF release date do not object to all parties agreeing that the old version of the UStAE applies.