Financial lease of your company car? Often a good idea!

More and more entrepreneurs are opting to lease a company car for business purposes. Financial lease is particularly popular. Why? We would be happy to explain here.

The unique aspect of financial leasing is that you become the immediate owner of the car. This means you benefit from many tax advantages, as the car appears on the balance sheet. Furthermore, you do not have to pay the purchase price of the company car immediately, so a large portion of this money is freed up to be invested in your business. Every month, you pay a fixed amount for principal and interest. As the owner of the company car, you decide for yourself how it is equipped, customized, and branded. You also decide where to have your company car serviced, and you can use the car abroad without any problems.

Even if your company has sufficient funds to purchase the company car itself, it can still be wise to opt for a financial lease. It is usually a simple calculation to determine what the money can yield if you invest it in the development of your business.

Benefit from tax advantages

Do not confuse financial lease with operational lease. With an operational lease, you do not become the owner of the company car and must return it after the (often shorter) lease period. Consequently, you do not benefit from the many tax advantages, such as the deduction of VAT, interest, and the investment allowance. You can view financial lease as an investment rather than an expense. Contracts with a term of up to 5 years are possible.

Also ideal for start-ups

Starting entrepreneurs, in particular, can often better invest their initial capital in their business than in a company car. If they need a company car, financial leasing is a smart choice. As a starting entrepreneur, you can drive a new company car immediately. All you need to do is be registered with the Chamber of Commerce.

Used company car with financial lease?

You can also finance a used commercial vehicle with a financial lease. With all the previously mentioned benefits, plus the advantage of a lower purchase price, translated into lower monthly payments. After all, the initial high depreciation of the company car has already been accounted for.

Financial lease with BKR registration?

Many entrepreneurs believe that financially leasing a company car is not possible with a BKR registration. That is not always true. Naturally, your financial situation is assessed to determine whether it is sufficient to meet the monthly obligations. However, a BKR registration is not necessarily an obstacle. The focus is primarily on the individual, not just on 'the rules'.

Is there a tax addition for company cars?

Do you also use the company car financed via financial lease for private purposes? If you drive more than 500 private kilometers per year with it, the tax authorities consider this as remuneration in kind and you will be subject to a tax addition. The percentage for a petrol and diesel car currently amounts to 22% on the purchase price. A favorable aspect, however, is that this purchase price is lower because no BPM is levied on it. Incidentally, you also pay a lower motor vehicle tax rate for a company car with a grey license plate.

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Benefits of financial lease summarized

• Driving a new company car
•  No large investment required
• Term of up to 5 years possible
• You are the direct owner of the company car
• Attractive tax benefits
• Freedom in execution, maintenance and design