Unlocking Tax Benefits: Leasing a Vehicle with a Buy-Out Option in Hungary

Hungary’s personal income tax law (SZJA) underwent changes in 2024, clarifying the definition of leasing agreements. This clarification does not affect tax rules but clarifies how leasing with a buy-out option is handled. When a company acquires a vehicle (or any asset) through open-ended financial leasing with a buy-out option, the transaction is treated as a general rental for the leasing company. This applies to all relevant taxes, including VAT, corporate tax, and other levies. Leasing a vehicle with a discounted buy-out option is a common practice for businesses to provide employees with access to newer vehicles at a reduced cost. However, tax authorities and regulations recognize these benefits. This article specifically examines open-ended financial leasing. At the end of the lease term, there are three potential scenarios: the leasing company buys the vehicle, designates a third party to purchase it, or returns the vehicle to the leasing company. This article focuses on the buy-out option, as it’s the most complex scenario. It involves assessing the market value of the vehicle at the buy-out time and determining the price the leasing company is willing to accept for relinquishing its right to purchase the vehicle at a discounted rate. This right might even be transferred for free.