September 23, 2020

What is the taxation of a LLD?

Taxation is a key element to consider when a project of acquisition of one or more vehicles by a company or a professional, whatever the mode of financing chosen, between the cash payment, the conventional credit lease with purchase option (LOA) or long-term lease (LLD). This latter formula has many advantages, particularly in terms of taxation รถเช่าเชียงราย พร้อมคนขับ . Decryption and advice.

A Reminder of what an LLD

The Long Term Rental (LLD) is a formula reserved for professionals wishing to have a vehicle without buying it, but by renting it for a period of between 12 to 60 months without cash.

During this period, the registration card remains in the name of the bank or organization that financed the vehicle. However, the tenant’s details are mentioned. At the end of the contract, the vehicle is returned, contrary to the case of the LOA, รถเช่าเชียงราย crown carrental  where the tenant can become the owner.

 taxation of a LLD

An LLD can not be partially refunded, but after the first 12 months, full repayment is possible. Penalties for early termination are sometimes levied, in addition to the difference between the amount remaining due and the estimated value of the vehicle on the day of return. By using the LLD, the cost of using each vehicle in the fleet is known in advance and fixed, which allows controlling the budget. In addition, the company’s debt and investment capacity is preserved, as is the structure of its balance sheet, with the absence of capital assets and other debts. Administrative management is simplified and the company avoids the risk of depreciation at the time of sale, on a very fluctuating occasional market. Also in terms of taxation, the LLD is not lacking in interest. In fact, the tax advantages linked to the purchase of a company car are very limited, whether on the deduction of depreciation, taxes, the recovery of VAT, the increase of social contributions and the tax on income for those who use the vehicle on a personal basis.