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V2069-14 30 July 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · arrendamiento financiero

Fiscal treatment of a lease with purchase option depends on accounting classification and purchase commitment

A company asks about the tax treatment in IS, VAT and IRPF of a lease agreement with a purchase option. The DGT states that IS classification depends on whether PGC and legislative criteria are met, while VAT treatment changes from service to goods supply if a purchase commitment exists.

The question raised

Treatment of the contract for Corporate Income Tax and Value Added Tax purposes, as well as the Personal Income Tax withholdings that may be applicable.

The DGT's ruling

In Corporate Income Tax, the transaction shall be a finance lease if the purchase option amount is less than the value of the asset minus the maximum depreciation installments; otherwise, it shall be an operating lease. For VAT purposes, as long as there is no commitment to purchase, it is a provision of services with accrual upon each installment; if there is a commitment, it is a supply of goods with accrual upon the formalization thereof. For Personal Income Tax, the company must apply withholding tax on the lease income if the legal exceptions do not apply.

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