Today the market leasing services distinguishes two kinds of leasing: financial and operational. Avis Ukraine offers operational and financial leasing on the term from 12 to 48 months with prolongation possibility.
In operational leasing cars are on the Avis’s Ukraine balance, thus increasing general Lessee’s profitability. In financial leasing a car is on the Lessee’s balance and leasing payments belong to the company’s expenses decreasing amount of the income tax.
Financial vs Operational Leasing
|Financial Lease||Operational Lease|
|During the leasing period 75% of car value must be amortized or amount of lease payments (lease interest, insurance interest + offset of car value (VAT excluded) should be equal or more than the incoming (initial book value (VAT excluded) car value.||The term of car usage must not exceed depreciation period.|
|After the end of the lease contract the car belongs to the Lessor||After the end of the lease contract the car belongs to the Lessor.|
|Account on Lessee’s balance||Account on Lessee’s balance|
|Tax on profit|
|Initial car value is not included into profit before||Initial car value is not included into profit before|
|Leasing payments (insurance, % for debt capital, leasing percent) completely deductible from gross expenses||Leasing payments are 100% deductible from gross expenses|
|Fuel administration option. Expenses are 100% deductible from gross expenses||Fuel administration option. Expenses are 100% deductible from gross expenses|
|If Lessee requires it is possible to receive paid service of waybill registration for petrol writing off. Expenses of this service are 100% deductible from profit before tax||If Lessee requires it is possible to receive paid service of waybill registration for petrol writing off. Expenses of this service are 100% deductible from profit before tax|
|No VAT credit. VAT deducts from gross expenses. Lease payment, which consists of insurance payment, interest on loan, interest on lease, is not taxable by double VAT. 100% VAT belongs to service payments, what is an integral part of a financial leasing agreement with services.||100% VAT credit|