According to the general rules, the recovery of VAT related to the purchase of passenger cars is prohibited, so in the case of many companies, the question arises as to whether it is better to purchase company cars in the context of an operational lease or an operational lease. Long term rental.
This opens up the possibility of at least partial deduction of VAT, which naturally means that the company must also pay the operating costs and profits of the leasing company.
In difficult economic situations, there may be a solution to this if a specialized fleet management company is formed within the group of companies
Niveus Consulting Group has drawn attention. Lajos Bagde, Partner at Niveus Consulting Group, emphasized that a properly designed fleet management model provides an opportunity to improve the tax burdens related to passenger vehicles within the company’s group, especially with regard to VAT.
You can save millions
According to the expert, the available tax advantage can reach approximately a quarter of the car’s value, depending on the use of the car.
- In the case of a passenger car with a gross value of HUF 15 million, the fleet manager includes approx. You can recover 3.2 million Hungarian forints of VAT in full,
- While an entrepreneur who is a member of the leasing group can deduct up to 100 percent of the VAT content of the rental.
This means that at the company group level, the value of the tax benefit available for such a car could be up to 3.2 million Hungarian forints per car, which
In the case of a fleet of ten cars, this can lead to significant savings of up to tens of millions of forints, and with thirty cars, the savings already reach hundreds of millions.
“Moreover, in the current high interest rate environment, financing costs are also significant, so if companies can avoid taking out loans, it could also result in significant savings for them,” Lajos Bagdi noted.
The expert explained that in addition to the advantages mentioned above, a specialized fleet manager can achieve better conditions for the company group when purchasing and maintaining vehicles. On the other hand, the asset protection aspect is not the least, since passenger cars owned by a company must be owned by a different company from the company that practices The principal activity, the greater of which represents security in respect of the assets.
“At the same time, creating the right structure is essential both in terms of taxes and legal aspects, and it is worth considering involving an advisor when creating it,” concluded Lajos Bagdei.
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