Table of Contents:
1. What Tax Benefits Does Operating Leasing Provide?
2. Should a Tax Scheme Be Reported for Operating Leasing?
The Minister of Finance has issued the first general interpretation addressing the classification of operating lease agreements under tax scheme regulations (General Interpretation No. DTS5.8092.4.2024 dated December 24, 2024, regarding the qualification of operating lease agreements under tax scheme regulations). Many lessors, as a precaution, report tax scheme information (so-called MDR) to the Head of the National Tax Administration when entering into operating lease agreements for passenger cars with entrepreneurs, although experts argue that this is excessive for standard leasing agreements. Has this general interpretation clarified the matter?
What Tax Benefits Does Operating Leasing Provide?
Operating leasing is a common financing method for the purchase of passenger cars, as well as other fixed assets, intangible assets, land, or perpetual usufruct rights to land. Leasing offers certain tax benefits—for instance, leasing installments (though not all of them) can be included as tax-deductible costs, including the initial installment, unlike purchasing a car with cash (in which case tax deduction occurs through monthly depreciation write-offs). Thus, if an entrepreneur opts for leasing instead of purchasing a car outright, it could be considered a tax scheme aimed at tax optimization.
Should a Tax Scheme Be Reported for Operating Leasing?
In the general interpretation, the Minister of Finance indicated that if the lessor:
- Offered this financing model to the client (even though the client initially planned to enter into a different type of agreement), but the client decided on operating leasing due to the tax benefits presented;
- Has information that the agreement was entered into mainly due to tax benefits (e.g., the client provides such a statement, or the lessor is a related entity to the lessee);
- Is aware (or should be aware) that the client requests contractual terms clearly indicating this purpose (e.g., through setting extraordinary contractual provisions such as an unusually high initial installment, which would not be expected from a rational entrepreneur);
– then it should be considered that the “main benefit criterion” has been met—thus, the arrangement would qualify as a tax scheme subject to reporting to the Head of the National Tax Administration.
However, if the lessor:
- Does not know the motivations of the client for entering into this type of agreement;
- The agreement has standard terms (e.g., typical installment amounts, standard agreement duration, etc.);
– then there are no grounds to consider that the “main benefit criterion” has been met, and thus the arrangement would not qualify as a tax scheme (as it does not meet the criteria outlined in Article 86a § 1 point 10 of the Tax Ordinance).
Unfortunately, reading the general interpretation does not provide a definitive answer on whether operating leasing should be reported as a tax scheme. The responsibility for correctly classifying operating leasing as a tax scheme still rests with taxpayers. The general interpretation can be treated as a guideline helpful in analyzing the issue of MDR reporting for leasing agreements.
