Leases are special forms of financing, where a lessor allows a lessee to use the subject of the lease in exchange for a certain consideration. A consequence of this is the discrepancy between legal and economic ownership of the subject of lease, which also has an effect on the tax treatment of the transaction. Value added tax is a turnover tax, which taxes the supply of goods as well as the supply of services. The classification of leasing contracts under certain transactions is often problematic because of its specifics, but doing it correctly is critical for further tax treatment.
The purpose of this master’s thesis is to comprehensively present the treatment of leases from the value added tax’s point of view. In the beginning of this assignment, there is an introduction to leases, followed by a short presentation of core principles and institutes of value added tax. Afterwards, the thesis focuses on particular issues of value added tax that are specific for leasing contracts and often problematic in practice. Firstly, the issue of understanding various leasing contracts as a transaction of either supply of goods either supply of services and the criteria, established by case law for the purpose of the classification are introduced. It depends on such classification whether the value added tax will be calculated upon the delivery of the object of leasing or will it be calculated monthly from an individual instalment. This is followed by a discussion of value added tax exemptions that are frequently present in leasing transactions, either because the subject of the lease is immovable property or because the lessor shows the financial costs of financial leasing in such a way that they can be considers as payment for financial services. The last chapter focuses on tax consequences, which occur when the leasing contract is terminated because of the fault of the lessee. Since the VAT regime is the subject of both EU and national legislation, special attention is paid to decisions and interpretations of certain concepts by the European Court of Justice.
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