Value for tax purposes
How to reclaim the vat on lease for passenger cars*
Based on Act 1992 of Law LXXIV on Value Added Tax, no VAT is reclaimable on goods and services not solely used for business purposes.
The same situation is in connection with the VAT charged on operational leasing services of passenger cars.
VAT on the leasing fee is only reclaimable if the company car serves solely the business interests of the Company. This means that:
- There is no private use of the car at all.
In this case, the Company must prove that the car was used solely for business purposes. This matter must be supported with such documentation as a road log, or storage records. In the case is sufficiently supported, the VAT on leasing fees is reclaimable.
- There is some private use.
The leasing fee for the use of the company car is paid by the employee to the Company. In this case, the Company issues an invoice with VAT (based on market price) to the employee for the leasing services.
Under the PIT (Personal Income Tax) legislation, it is not considered private use if the employee using the car, pays the official standard HUF/kilometer cost rate, the costs calculated by the fuel consumption rate, and the official fuel prices published by the Hungarian Tax Authority (NAV).
In the case that the employee pays no leasing fee to the Company for private use, no VAT is reclaimable by the Company on the leasing fee.
Company car tax*
Based on the PIT legislation, company car tax is not payable by the Company if the employee compensates the Company for:
- fuel costs calculated based on invoices
- fuel costs calculated by the fuel consumption rate and the official fuel prices published by the Hungarian Tax Authority
- the official HUF/kilometer standard cost rate
If the above conditions are not met, the company car tax is payable by the Company.
* This information is based on data available to Business Lease at the time of preparation. For details specific to your conditions, please consult with your auditor or tax advisor.
Positions – Reclaim the VAT on lease for passenger cars
There is the possibility to reclaim the VAT on operative leasing fees in the percentage of business use in compliance with legal regulations related.
You can read more here about the position of NGM and NAV regarding the VAT deductibility: