Dutch VAT on leases with the option to purchase
When you lease company assets with the option to buy or own the rented assets, a vast knowledge of whether and when to pay VAT is crucial to avoid fines.
Leasing can have several formats. The most common one is an operational lease. Under this format, company assets can be rented, but they will never become the property of the tenant in question. Since the total rental period of the operational lease is not determined, VAT on the rent is divided over the lease terms.
This is not the case for a financial lease. When a tenant rents company assets based on a financial lease contract, he will automatically possess those assets after the payment of the final lease term. The duration of the lease term (and the accompanying total rent) are thus set in advance. Therefore, the format qualifies as a delivery instead of an unambiguous lease. Hence, you should pay VAT on the total price of this delivery at the first lease term.
Besides the operational and financial lease, you can also lease company assets based on a hybrid format. The most bespoke hybrid format in terms of VAT, is the lease with the option purchase or lease-purchase. This lease offers tenants the chance to purchase the rented assets when the lease comes to an end. If this option to buy is motivated by an economically logic decision, the Court of Justice considers the lease with the option to purchase as a delivery as well. Besides the economic motivation, the delivery status is also based on the total cost of the asset. The total lease term should meet the selling price, including all financing costs.
Lease or delivery
Since not every lease format qualifies as a lease, it is wise to verify whether a lease is considered as a delivery. Only after knowing its status, you can determine the amount and payment date of the VAT on the lease.
Does the lease include an option to buy? When the option is not included, the lease qualifies as a lease and VAT is due every lease term. In case of an option to purchase, the selling price determines the VAT. Is this price is the genuine purchase price and are tenants generally tended to buy? Then you should pay VAT on the total amount at the first lease term.
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