Taxation of the parties to the leasing agreement, part II


Lease payments usually include:

  • initial payment and / or initial / zero rent,
  • individual leasing installments,
  • interest on leasing installments.

In addition, when concluding leasing contracts, the following fees may appear on invoices:

  • for vehicle registration,
  • for the quote,
  • manipulative,
  • insurance.

For the purposes of income tax settlements, an important issue is, first of all, determining the nature of these fees. This is because the rules for including them in the tax records will depend on him, and these are not unambiguous, especially from the point of view of the lessee in the operating lease agreement.

Accounting for the initial fee

The initial fee / rent, or zero fee, has long been a point of contention between representatives of tax offices and taxpayers. Until 2011, tax offices were of the opinion that it is an expense for the entire lease period, therefore it should be recognized in tax costs proportionally to the duration of the lease contract, not once. However, due to the different opinion of the courts, the position of the authorities has changed. Currently, the courts and tax offices unanimously rule that, unless the leasing contract provides otherwise, the initial payment can be considered as a one-off cost in tax matters. For example - in one of the issued individual tax interpretations (IPTPB1 / 415-226 / 13-4 / AP of 02.07.2013), the director of the Tax Chamber in Łódź explains:

“As a rule, the initial payment is a non-returnable spontaneous payment, not assigned to individual leasing installments, while its incurring is a necessary condition for the performance of the leasing contract. Such a fee is paid by the lessee before the leasing is started and it is the payment of this fee that determines whether the leasing will take place at all. If there is no provision in the leasing contract according to which the initial payment is a fee for the service performed for the period of its duration, it should be considered as a one-off cost when incurred. Then there are no grounds to treat it as an expense that relates to a period exceeding the tax year. "

However, the individual nature of the contract should still be taken into account. The tax authorities have not issued a general interpretation, but only adjudicate in individual cases, paying special attention to the content of the leasing contract.

As a rule, the lessor has the right to include the initial payment directly in the current costs, without the need to proportionally divide it over the duration of the lease. Because both the initial and zero rent are independent and non-returnable. They are not assigned to individual leasing installments, therefore it can be considered that their payment is a necessary condition for the performance of the leasing contract, but this fact does not necessarily mean that it applies to the entire duration of the contract.

Settlement of individual installments

The method of recognizing individual installments in the lessee's tax costs will depend on the type of lease.

Operating lease

Since its subject remains the property of the lessor throughout the duration of the contract, the user of the item has no right to enter it into the company's fixed assets register. Thus, there is no right to depreciate the used item. Each of the individual leasing installments will be the cost, usually documented with an invoice from the lessor. Both the capital part of the installment and the interest part will constitute the tax cost, recognized in the tax book in accordance with the invoice issue date.

Financial leasing

The issue of settling individual leasing installments looks different in financial leasing. Since in this case the subject of the contract is already owned by the lessee from the beginning of its term, he has the right to enter the item into the company's fixed assets register and to depreciate it. Therefore, depreciation write-offs will be made at the tax cost, usually posted at the end of each month. Since depreciation will be the basis for recognizing the cost of capital leasing, individual installments will be only a part of the cost. The amount of the lease installment is divided into capital and interest. In the capital lease, only the latter will constitute the tax expense in the company.

other costs

Both in operating and financial leasing, the user of an item has the right to include current expenses related to its use as current costs. These will be, in particular, expenses for maintenance, energy / fuel, ongoing repairs or the purchase of additional accessories for the activity. Importantly, these expenses, if they meet the basic definition of tax costs, are not limited in any way.

Example 1.

The operator of repair services signed an operating lease agreement for a passenger car. As the car is used to travel to the customer and transport tools necessary for work, the expenses for the purchase of fuel are recognized directly in tax costs. Therefore, despite the fact that the leased car is not a company's fixed asset, the entrepreneur is not obliged to settle the current expenses related to it on the basis of mileage.

In the case of an operating lease, the cost will also include any fees specified in the lease contract, incurred in the basic term of the contract. In practice, most of these fees appear on the first invoices documenting the lease transaction and relate to the initial payment, handling charges and appraisal fees. In addition, some of the companies also include insurance or, for example, vehicle registration, if the subject of the contract is a car. Then, if these fees are included in the lease agreement, they are, like others, tax-deductible as those related to the lease. The assignment of these benefits to the entire value of the leasing contract is important especially in terms of VAT, in the event that its deduction is only available within the limit specified by law.

Detailed recognition of the cost under operating and financial leasing


Operating lease

Financial leasing

entry fee

initial rent

handling fees

leasing installments in the capital part

leasing installments in the interest part

the current use of things (maintenance, repairs)

adapting the item for use

depreciation write-off from the initial value