In the case of a lease-sale agreement, the purchase is counted as a direct purchase and the financing commission is generally also an eligible charge. VAT is payable and recoverable on the first staggered payment. For goods, VAT is counted as a separate value that facilitates the separation of their purchase costs. Lease-to-sale contracts last between 2 and 4 years, although the contract can be settled at any time throughout the contract. Leasing agreements are treated taxly as a purchase by the customer when the vehicle is in use. To recover VAT on a rental purchase, you need a valid VAT bill and the devices purchased must be detectable for commercial purposes. This can be done either by signing the agreement by the company manager or the business manager at the Point of Sale, but the signature of the entity must be VAT for it to work. The exact effect depends on the circumstances. For example, a customer can order a commodity while making a down payment. This will create a tax point equal to the amount paid, expected on that date between the two parties. A financing agreement is then entered into through a third-party financing company.

As a result, the initial down payment is converted into a customer`s payment to the financial company, which is in turn credited by the financial company as payment for the delivery of the goods by the original supplier to the financial company. This removes the initial checkpoint. Other guidelines provide more detailed information on VAT processing on rental transactions. Other details of the distinction between rental plans and leases can be made in this case. The main difference between buying leases and buying the contract is that instead of having the choice to buy the vehicle you would have with the purchase of the contract at the end of the contract, you have already entered into a contract to purchase the vehicle at the end of the contract. This contract is reserved for those who are absolutely sure that they want to take possession of the car at the end of the contract and pay all the balloon payments related to the contract. The vehicles are a little different. For commercial vehicles purchased under a rental agreement, you receive the full VAT (100%) on purchase, but NOT on monthly payments. Leases differ by claiming the full VAT on monthly payments and not the purchase. That`s the difference.

The applicant, Mercedes-Benz Financial Services Ltd, a subsidiary of Daimler AG, proposes three types of standard contracts for the financing of the use of motor vehicles: a standard lease, „leasing“, a „lease“ and a lease agreement with the „Agility“ purchase option, which combines certain characteristics of the first two types of contracts and allows customers to defer the choice between renting and buying after the vehicle is handed over. and also sets a maximum mileage from which the customer must pay a fine. In this case, it was not disputed that this type of agreement falls under the „service“ category, with VAT due on monthly payments. On the other hand, the „Hire Purchase“ and „Agility“ agreements provide for a transfer of ownership, but on different terms. Under the „lease-sale“ agreement, all monthly payments made during the duration of the agreement generally constitute the total sale price of the vehicle, including financing costs. At the end of the contract, a small additional fee must be paid for the purchase of the vehicle. This final payment is included in the agreement and does not depend on the option exercised. Again, it was not disputed that this type of agreement falls under the category of „delivery of goods“, the VAT being due at the time of the delivery of the vehicle.