Vat Treatment Of Instalment Sale Agreement

In some cases, the financial document also serves as a VAT invoice when it is issued to the customer and normal delivery times apply. A VAT invoice issued to the customer, whether it is the agreement or a traditional VAT invoice, creates the tax point for the delivery if it is issued in advance or within 14 days by the basic tax point. All types of businesses will have to buy large assets at some point and, as companies rarely lag in cash to buy that cash, the company will have to decide whether to enter into a tempes sale or a financing lease. Goods delivered during the lease-sale or as part of a credit or conditional sales contract are generally treated in the same way as a sale of property subject to a prior title. This means that the delivery date is linked to the basic tax point, unless the supplier issues a VAT bill. The exact effect depends on the circumstances. For example, a customer can order a commodity while making a down payment. This will create a tax point equal to the amount paid, expected on that date between the two parties. A financing agreement is then entered into through a third-party financing company. As a result, the initial down payment is converted into a customer`s payment to the financial company, which is in turn credited by the financial company as payment for the delivery of the goods by the original supplier to the financial company. This removes the initial checkpoint. The tax point for separate delivery is the date of payment of interest. If the payments contain an item attributable to the credit, it means that a tax point occurs at each payment receipt.

It is recognized that some providers may have difficulty isolating credit charges when the agreement provides for a fixed interest rate. Under these conditions, a housing tax centre may be appropriate (see VATTOS6300). The point of the property tax for delivery to the customer is, in most cases, the date of delivery or withdrawal of the goods. If there are two deliveries (for example. B to and by a financial company), this is the tax basis for the delivery of the customer by the financial company. The point of the property tax for delivery to the financial company is usually made on the date the goods are made available to the financial company. Unless the agreement is otherwise stated, it may be the effective date of the financial agreement, possibly on the date it was signed by the last party. In addition, a deposit may be recovered by the supplier as part of the financing contract procedure. It will first be received by the supplier as a representative of the financial company, but will then be immediately « received » from the supplier as a partial payment for delivery to the financial company. Again, unless a basic tax point or a VAT invoice is availabe, a payment tax point has been created for both the supplier and the financial company.

You will see from these examples that the effect of a prepayment is determined by the circumstances in which it is received. Under the judgment of the Court of Justice in the Mercedes Benz Financial Services (MBFS) C-164/16 (see VATSC10172), certain contracts that may be called lease-sale contracts are processed for VAT purposes, which are considered rental and service transactions (not as deliveries of goods and separate delivery of credit). This is the personal purchase of contracts (PCPs) or similar agreements for which the contract provides for an optional material payment. These optional payments can be determined at different levels: companies can use other methods to determine the likely market value of the asset. When they choose to do so, they must provide evidence of how they arrived at the numbers they used. This article is a general fact sheet and should not be used or used as professional advice.