Draft amendments of the VAT Act with respect of the lease agreements

On the website of the Ministry of Finance are published draft amendments in order to adjust the tax acts in 2017. In the transitional and final provisions to the Act amending and supplementing the Excise duties and tax warehouses act is proposed the introduction of the following amendment of the VAT Act with respect of the lease agreements:

Lease agreements will be deemed supplies of goods, subject to taxation with VAT, if the following conditions are met:

– The lease agreement stipulates transfer of all risks and benefits ensuing from the ownership of the goods;
– A provision is set forth for passing the right of ownership of the goods in the end of the contract term;
– The present sum of the instalments due under the lease agreement, except for the interest, is practically identical to the market price of the goods as of the date of handing over.

If the above mentioned conditions are not met, VAT shall be proportionately charged on each lease payment.

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