The loan is guaranteed against your vehicle and once all repayments due under the terms of the contract have been made, you will take possession of the vehicle. When your company funds the sale, you display the credit tax separately on your bill and this credit tax is exempt from VAT (such as management, documentation or acceptance fees). All other fees are exempt from VAT if you charge $10 or less. Furniture dealer Primback courted interest-free credit terms. When purchasing the goods, the customer entered into a written agreement with a financial company for a loan on the price of the goods (deducted from any down payments). Under this agreement, the amount of the loan should be paid to Primback on behalf of the client and repaid by the client to the financial company in increments, but without additional interest. For example, if goods were sold for $600 at 6 months of interest-free credit terms, then, for the customer, he paid only 6 $100 increments to the financial company. (If VAT is levied on each payment (rent), then it is NOT a property contract) Lease-sale contracts are generally valid for periods ranging from 2 to 5 years: offers a FIXED MONTHLY PAYMENT for the duration of the agreement. Under the judgment of the Court of Justice in the Mercedes Benz Financial Services (MBFS) C-164/16 (see VATSC10172), certain contracts that may be called lease-sale contracts are processed for VAT purposes, which are considered rental and service transactions (not as deliveries of goods and separate delivery of credit). This is the personal purchase of contracts (PCPs) or similar agreements for which the contract provides for an optional material payment.
These optional payments can be set at different levels: If you sell through a lease-sale agreement in which the financial company becomes the owner of the goods, you will account for VAT on the actual value of the goods when you deliver. If you receive a commission from the financial company, this may also be subject to VAT. However, if it is written in your contract that you can keep the deposit if the customer changes his mind and this actually happens, no VAT is due. If you`ve already accounted for this VAT on a tax return, just adjust your next tax return. Goods delivered during the lease-sale or as part of a credit or conditional sales contract are generally treated in the same way as a sale of property subject to a prior title. This means that the delivery date is linked to the basic tax point, unless the supplier issues a VAT bill. You don`t need to return it or resell it at the end of the deal – it`s now your vehicle you choose. Other charges may also be imposed under the credit contract (see VAT FIN3125). VAT rules distinguish between leasing and lease-to-lease/conditional sale terms. The former are treated as services and the latter as deliveries of goods. The main result of this distinction is the timing: VAT on an HP agreement is due in advance by the tenant on the cost of the asset, while VAT on rental contracts is due for each rent payment.