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An individual requested clarification on the VAT treatment of the premium charged at the start of a lease agreement with a purchase option. The DGT ruled that the purchase option constitutes a provision of services as long as there is no commitment to exercise it, whereas the transfer of the property will be treated as a supply of goods.
This ruling clarifies the distinction between the service component (the option) and the asset component (the property) for VAT purposes in lease-to-own arrangements.
The tax team reviews your specific situation.
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