After reading through some older threads and posts in the forum (Buying a car in Europe with a offshore bank account) I started wondering what is the actual finance sense to set up a company that buys a car on your behalf and then leases it to you compared to just leasing the car personally via lease company the dealership works with?
I am not talking about a situation where you are trying to hide your money or the fact that you can afford the car/monthly payments for the car.
I am asking what is the economical sense? I understand that you can claim the VAT for the initial purchase of the car, have all of it's warranty and insurances claimed as company expenses (and reclaim the VAT on those as well) for the company you've set up but in the end you still have to make monthly lease payments towards your own company which have to be high enough so that there is a small profit left in the company and the company needs to charge VAT on those payments that you make towards them. Not to mention the additional expenses the company would have such accounting + 10% profit tax (at least in Bulgaria) for the small profit you leave in there. All I see is that you've created additional expenses and cost just to put in a company as the owner of the car.
I know that what people do most of the time that does at least initially save money (which at least in Bulgaria is gray area/kind of illegal) is that they own a LTD company which really deals with something else (e.g. Software development). Then they buy a corporate car but use it all the time as a personal one. They claim the VAT, put all of the expenses (fuel, insurance, warranty work, tires, repairs) as company expenses and claim the VAT on that as well. Now Bulgarian Tax Authorities hate this as under Bulgarian law you need to use the car only for business work and if you do use it for personal stuff you need to keep a logbook of the mileage for personal vs business and base on that not put 100% of the expenses as company ones (e.g. you use the car only 40% of the time for personal stuff so you can claim only 60% of the expenses and VAT as a result).
I am not talking about a situation where you are trying to hide your money or the fact that you can afford the car/monthly payments for the car.
I am asking what is the economical sense? I understand that you can claim the VAT for the initial purchase of the car, have all of it's warranty and insurances claimed as company expenses (and reclaim the VAT on those as well) for the company you've set up but in the end you still have to make monthly lease payments towards your own company which have to be high enough so that there is a small profit left in the company and the company needs to charge VAT on those payments that you make towards them. Not to mention the additional expenses the company would have such accounting + 10% profit tax (at least in Bulgaria) for the small profit you leave in there. All I see is that you've created additional expenses and cost just to put in a company as the owner of the car.
I know that what people do most of the time that does at least initially save money (which at least in Bulgaria is gray area/kind of illegal) is that they own a LTD company which really deals with something else (e.g. Software development). Then they buy a corporate car but use it all the time as a personal one. They claim the VAT, put all of the expenses (fuel, insurance, warranty work, tires, repairs) as company expenses and claim the VAT on that as well. Now Bulgarian Tax Authorities hate this as under Bulgarian law you need to use the car only for business work and if you do use it for personal stuff you need to keep a logbook of the mileage for personal vs business and base on that not put 100% of the expenses as company ones (e.g. you use the car only 40% of the time for personal stuff so you can claim only 60% of the expenses and VAT as a result).
