Deduct the leasing or renting of a utility vehicle

The deduction for utility vehicles is very advantageous in Belgium.

In fact, as you probably know, as a self-employed, you can deduct 100% of the costs associated with a utility vehicle. For more information on the principles governing the deduction of expenses relating to utility vehicles (and all the relevant recommendations ✨ ), we invite you to read this article.

Finally, before we talk about the tax deduction for leasing and other renting, it’s worth making sure that your vehicle meets the definition of a utility vehicle according to the FPS Finance: you can find the definition of utility vehicles here on their website.

Now, let’s discuss the deduction of leasing and renting for utility vehicles.

Opting for leasing or renting does not affect the deductibility of your utility vehicle, but it can have a major impact on the amounts deducted in the first year.

The way you finance your vehicle does not affect its deductibility: you simply deduct 100% of the costs relating to the expense – whatever the expense may be.

That said, the accounting for the purchase of your van is not the same:

• With leasing, as with business loans, you deduct only the interest on the lease and write off the purchase over the term of the contract. You do not deduct the purchase AND the repayment of the loan 😉.

• With renting, you deduct the entire monthly payment. There is no purchase and therefore no amortization.

In practice, therefore, the amounts deducted over the life of the vehicle are similar.

If you acquire a vehicle at the end of the year, the method of financing will potentially have an influence on the amounts deducted in the first year.

This is where the method of financing will have an influence on your tax, and renting can be very interesting.

Unlike leasing, where it is the depreciation that determines the deductible amounts, by opting for renting, it is the payments made that are deductible.

If you start renting at the end of the year (e.g. on 24 December), and you make an initial exceptional payment of €10,000 (at your request), for example, it is this €10,000 that is tax deductible for your current year.

If you have a profit, you’re making an excellent tax bargain and reducing your tax base by €10,000. Let’s hear it….

Remember, in all cases, cash is king 👑

When buying your vehicle, absolutely consider the financial issues:

• Do I have the cash available to buy or am I forced to finance its purchase?
• Is this a good use of my cash or could I use it more efficiently?
• What are the terms of the contract? Monthly repayments? The residual value? Interest rates? The trade-in value? And so on.

Are you still hesitating between leasing and renting your van?

In Belgium, there are 2 major differences between leasing and renting:

• Services included: renting contracts often include the cost of registration, replacement vehicle, etc., whereas leasing contracts do not. – Leasing contracts do not. So be sure to analyze the contract you are offered.

• Purchase option: with a leasing contract, you often have the option of buying your utility vehicle at a set percentage at the end of the contract. This is not generally the case with renting contracts.

The decision is therefore purely financial – not fiscal – and will depend on the offer you receive. Happy bargain hunting 😉.