Companies Could Save Millions With In-house Fleet Management
The general rules prohibit VAT reclaims on the purchase of cars, so many businesses are wondering whether it is better to buy company cars through operating leases or long-term rentals. This opens up the possibility of at least a partial deduction of VAT, which, of course, means that the leasing or renting company must also pay the operating costs and profit of the business. In a difficult economic situation, a solution to this may be to set up a specialized fleet management company within the group, Niveus Consulting Group pointed out.
Lajos Bagdi, partner at Niveus Consulting Group, pointed out that a properly designed fleet management model provides an opportunity to optimize the tax burden on passenger vehicles within the group, especially with regard to VAT. Depending on the use of the car, the tax advantage can be up to a quarter of the value of the car.
In the case of a car with a gross value of HUF 15 million, the fleet manager can reclaim the full VAT of approximately HUF 3.2 million included in the purchase price of the car, while the hiring group member can deduct up to 100% of the VAT on the rental price. This means that at the group level, the value of the tax advantage available on such a car can be up to HUF 3.2 million per car, which can result in significant savings of tens of millions of forints for a fleet of 10 cars, and hundreds of millions of forints for a fleet of 30 cars.
Bagdi also pointed out that, in the current high-interest rate environment, financing costs are also significant, so if companies can avoid borrowing, this could also result in significant savings for them.
In addition to the above advantages, a specialized fleet manager can offer the group better conditions for the purchase and maintenance of vehicles, and the protection of assets is not the least of these, as the cars owned by the company are owned by a company other than the one carrying out the main activity, which means greater security for the assets.
"However, the creation of a proper structure is essential, both from a tax and legal point of view, and it is worth considering the involvement of a consultant when setting this up," concluded Bagdi.
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