Leasing agreements are contracts by which the lessor (owner) enters into an agreement with the lessee (the person who leases) for the use of a tangible asset (land, vehicles, heavy machinery, yachts, aircraft etc.) At the end of the lease period, the lessee may have the option to purchase the said asset at a fraction of the original price. Such a choice must be exercised by the lessee, at the end of the lease period, for separate consideration.
In this regard the Cyprus VAT Services Department has authorized several leasing schemes aimed at investors, for example, the Cyprus Yacht Leasing Scheme and the Cyprus Aircraft Leasing Scheme.
For VAT purposes, the leasing of a yacht is considered a supply of service VAT deductible by the lessor; such services are taxable at the basic VAT rate of 17% but only to the extent that the leased yacht is used within the European Union territory. To be entitled to the deduction the lessor must be a company registered under the Registrar of Companies in Cyprus. In contrast, the lessee may be any individual or legal person, irrespective of residence or place of incorporation. The same principle applies to aircraft leasing.
At CX Financia, we use our network of associates to provide the best possible solutions in accordance with client needs and services.
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