The fiscal treatment of leasing is based on accounting principles as set out in the Income tax law (articles 2, paragraph 7 and 61).
Contracts included in the assets of the lessee
When a contract amount is included in the assets of the lessee, the latter is considered to be the owner of the goods for fiscal purposes. The goods, or rather the right to their use has to be depreciated according to the accounting rules being used in the company, and not over the duration of the contract. These depreciations are a fiscally deductible charge. For cars, however, a limit of 75 % is used to determine the amount deductible.
The lessee can choose either linear or degressive depreciation, except for cars. The interest charge included in the monthly rental costs also represents a fiscally deductible financial charge. It is set out in the depreciation table provided by the lessor.
The interest earned by the lessor represent a taxable income from which can be deducted all the charges usually allowed (cost of re-financing, overheads).
Contracts included in the assets of the lessor
When a contract is included in the assets of the lessor, the rental amounts are included in the lessee’s accounts as charges (overheads). For cars, however, a limit of 75 % is used to determine the amount deductible.
The lessor includes the goods in his assets and depreciates them according to his accounting rules. Degressive depreciation is not allowed. The rental earned by the lessor represents a taxable income from which can be deducted all the charges usually allowed (cost of re-financing, overheads, as well as the leased goods depreciation).
When buying movable goods in Belgium, a 21 % VAT is payable. The purchaser / lessor can deduct this tax from the VAT collected. The 21% VAT is calculated on the net purchase price. Leasing rental attract the same 21% VAT. The lessee can in turn deduct it from the VAT collected, with the exception of the cars where the deductibility is limited to 50%. If the lessee does not benefit from VAT deductibility, or only partially, then he will not be able to get the VAT back, or only partially.
In the event where the lessee decides to purchase the goods at the end of the contract, the lessor applies the same VAT rate of 21%. This VAT is deductible in the lessee’s books in the same conditions as those described above.