VAT exempt or chargeable - drawing the right line

Back in 2017, the Court of Justice of the European Union (CJEU) released its judgement on a released its judgment on a case involving the VAT treatment of a common type of lease agreement in the United Kingdom, a hire purchase contract.  

The case involved Mercedes-Benz Financial Services and it clarified which leases are exempt from VAT, and which are chargeable for VAT. 

Since then, many national tax authorities have reviewed their own VAT rules affecting car leases, based on the CJEU judgement and some other relevant cases.  

In the early years after the CJEU case there were some minor adjustments to rules in several countries that, in general, did not cause problems. In the past year, several national authorities made proposals that could increase the cost of many car leases.   

Experts at our Tax and Accounting Committee have discussed and monitored the developments leading up to, and since, the CJEU judgement. This has enabled Leaseurope to support member associations with their discussions with their national tax authorities, helping members to obtain improvements to recent proposals.