Operating lease (Rental)
Operating lease in Hungary is governed by the country’s civil code, its law on value-added tax and the law on corporate tax, as well as the decisions of the Hungarian tax authorities.
As of accounting rules, this construction is mostly similar to rental transactions.
- The leased- / rental object is owned by SG Eszközlízing Magyarország Kft. (Party to set up the object in the books as asset)
- The leased- / rental object is used by the lessee (rental fee may be set off as costs)
- VAT is paid monthly after the rental fee
- After the agreed basic lease term has expired, the lessee has the option to buy the leased asset at its market value. The residual value is calculated based on the expected market value at the end of the lease. In case if the actual market value should be higher (over 10%) than expected, the residual value shall be recalculated, respectively, the original value shall be confirmed by an expert’s opinion. Hungarian law does not allow assets to be purchased at their residual value.
The leased object shall be returned to the lessor in case if the client does not want to make use of the call option. The term of the operating lease may be extended.
Advantages of this construction:
- Will not set up the leased object as asset in his/her books and will not have to depreciate same
- Keeps the leased object out of his/her balance which will thus not appear as long-term debt – the lessee can improve the figures of his/her balance
- May set off the rental fee as costs
- Will not pay the VAT in a lump sum but in instalments after the rental fee
- May appoint third parties as potential buyers of the leased object at the end of the term
- The scope of coverage is more preferable for the lessee as in case of a credit transaction.