Supply of services vs delivery of goods Current

Supply of services vs. delivery of goods Current treatment: • Supply of services • Split of capital from interest • VAT applies to capital element at the VAT rate for goods • VAT does not apply to the finance element • VAT is deductible • Account for VAT at time of instalments EU Accession • • • Supply of services – main rule May be deemed as delivery of goods Case by case analysis of the leasing contract VAT Standard rated Treatment unclear and varies between countries

Cross border leasing Current treatment EU Accession Cross-border leasing + option to buy => importation by the beneficiary 1)within the Community • Intra-Community acquisition by the leasing company • Obligation to register for VAT purposes 2) with parties outside the Community • Importation

Place of supply Current treatment Leasing of: EU Accession New rules: • movable tangible property – where the beneficiary is located • • immovable property – where the property is located • • • movable tangible property except means of transport – where the beneficiary is located means of transport – where the supplier is located immovable property – where the property is located Use & enjoyment for leasing transactions with non-EU parties

Compliance Current treatment • VAT return • VAT purchase ledger • VAT sales ledger EU treatment • Register of non-transfers • Recapitulative statement for intra –Community deliveries and acquisitions • A list of capital goods subject to adjustment (e. g. fixed assets)

LOCAL LEASING – MOVABLE GOODS ROMANIA LOCAL SUPPLIER L – LOCAL LEASING COMPANY service supply of goods ROMANIAN CLIENT 2 operations: • Leasing – service: VAT on each installment NEW Financial VAT both on principal and interest; Operational VAT on lease installment; • Local supply of goods at the end of the leasing contract (if option exercised) VAT on residual value.

LOCAL LEASING – MOVABLE GOODS HU EU SUPPLIER RO ICD ICA L – LEASING COMPANY service supply of goods 3 operations: NEW • Intracommunity acquisition (ICA) in RO / VAT R/C; • Leasing - service: VAT on each installment • Local supply at the end of the contract (if option exercised) VAT on residual value. CLIENT

LOCAL LEASING – MOVABLE GOODS TR FOREIGN SUPPLIERS (outside EU) RO export import L – LEASING COMPANY service supply of goods CLIENT 3 operations: • Import by L Import duties (import VAT, customs duties) at the moment of import • Leasing service: VAT on each installment • Local supply at the end of the contract (if option exercised) VAT on residual value.

CROSS BORDER LEASING – MEANS OF TRANSPORT HU EU SUPPLIER L’ L – LEASING COMPANY RO service supply of goods ROMANIAN CLIENT 3 operations: • Leasing - service (except MS where leasing = supply of goods!) NEW always VAT of country of origin (HU) VAT registered person Client country of origin Non-registered person • • refund on 8 th Directive, subject to limitation in the NEW no refund If option exercised: NEW Intracommunity acquisition (ICA) in RO by L / VAT R/C L registration in RO (L’) Local supply (no transport)

CROSS BORDER LEASING – MOVABLE GOODS EXCEPT MEANS OF TRANSPORT HU MOVABLE GOODS (except for means of transport) RO L – LEASING COMPANY L’ service supply of goods ROMANIAN CLIENT 3 operations: • Leasing - service (except for MS where leasing = supply of goods!); VAT in RO if Romanian client is a taxable person R/C if Romanian client is a VAT registered person If option exercised: NEW • Intracommunity acquisition (ICA) in RO by L / VAT R/C - L registration in RO • Local supply (no transport)

CROSS BORDER LEASING – MEANS OF TRANSPORT TR MEANS OF TRANSPORT 3 operations: • • • L’ RO L – LEASING COMPANY NEW Import performed by L NEW L registration in RO by FR Leasing service Always VAT in RO Local supply of goods (no transport) service supply of goods ROMANIAN CLIENT

CROSS BORDER LEASING – MOVABLE GOODS EXCEPT MEANS OF TRANSPORT TR RO L’ MOVABLE GOODS (except for means of transport) L – LEASING COMPANY service supply of goods 3 operations: • Import performed by L NEW L registration in RO by FR • Leasing service VAT in RO if Romanian client is a taxable person R/C if Romanian client is a VAT registered person • Local supply of goods (no transport) ROMANIAN CLIENT