Who pays transport tax if the car is leased

Leasing today is a very popular form of business relationships, as it allows you to obtain the necessary fixed assets quickly and with minimal initial investment. Motor vehicles quite often become the object of leasing. If transport is involved in the transaction, the question of paying a transport fee naturally arises.

Which party to the leasing transaction is entitled to undertake the obligation to pay transport tax (TN) depends on a number of circumstances, which we will examine in this article.

Parties to the leasing agreement

Leasing a vehicle is a financial transaction made regarding the transfer of certain property for use, in our case a vehicle, drawn up in the form of an agreement. As with any leasing agreement, it stipulates the period for which the asset is provided for use, and at the end of this period the vehicle can be retained or returned.

There are always three parties to a leasing agreement:

• lessor - an individual or organization that buys any property (including vehicles) from the owner, but not for their own use, but to transfer this right;
• lessee - a legal or private person who receives the specified vehicle for paid use for an agreed period;
• supplier (seller) – the primary owner of the subject of the contract from whom the lessor purchases the property for leasing.

Which of these parties is required to pay transport tax? This depends on a number of parameters, which will be discussed below.

Fixed asset car property tax

Do I need to pay property tax on a car?

All car owners who purchase vehicles are aware of the Tax Code of the Russian Federation, according to which owners of motor vehicles are required to pay annual transport fees.

Due to the fact that vehicles fall under the category of movable property, some owners of the units must also pay this duty.

Both individuals and legal entities and organizations that are less fortunate have motor vehicles. After all, no measures were taken in their regard to abolish the property tax on movable units.

Therefore, institutions should be aware of vehicle tax issues.

Be careful with car leasing

The main attractive feature of leasing agreements regarding vehicles is the opportunity to use the vehicle, even if there is no financial opportunity to purchase it immediately, as well as the prospect of obtaining ownership of it.

But there are also negative features of such a transaction that should be taken into account and the risks correctly assessed before concluding a contract:

1. The credit is still lower. Interest on a leasing agreement is usually higher than bank interest. But the conditions of banks differ significantly and are not subject to revision and adjustment.
2. "Medical examination" of the car. Until the end of the contract, the lessor will regularly inspect the vehicle, which is still legally owned by him.
3. You'll have to ask first. The recipient of the car will not be able to carry out any legal actions with it without the permission of the lessor.
4. Remember, the car is not yours yet. If during the validity of the leasing agreement the recipient violates any conditions (payments were not made on time, mandatory technical inspection was not completed, maintenance was not carried out on time, etc.), the car will not become the property of the recipient, he will lose this right.

Legislative regulation of transport taxation

The controversial issue of payment of transport tax for the corresponding leasing is considered in a number of legislative documents:

1. Tax Code of the Russian Federation:
   Art. 357 – about who is the tax payer: the person in whose name the vehicle is registered;
2. Art. 358 – about objects of taxation;
3. Art. 360 – about reporting tax periods;
4. Art. 361 – about rates and benefits;
5. Art. 362 – on the timing of payment of TN;
6. Art. 363 – on the procedure for accepting payment.
7. Federal Law No. 164 “On financial lease (leasing)” dated September 11, 1998 regulates relations under a leasing agreement. Art. 20 states that any party to the contract can be considered the owner of the leased object.
8. Order of the Ministry of Internal Affairs of the Russian Federation No. 1001 regulates the establishment of ownership of a car by concluding a special agreement.
9. Letter of the Federal Tax Service No. BS-4-11/22368 provides additional clarification regarding the payment of TN in leasing.

Registration and payment of transport tax

In the end result, the provisions stated in the document take precedence. According to the agreements of the parties, it is determined when the car is leased, who pays the transport tax, and to whom it will be registered. There are several options for executing a transaction; let’s look at who is the taxpayer in each of them:

• Lessor. The legal entity on whose balance sheet the leased asset is located transfers it to the lessee for permanent use with subsequent purchase. However, the property is in his possession and registered in his name until the lessee pays the cost of the property in full.
• Lessor. A company that has a leasing object on its balance sheet transfers it for temporary use to the lessee, all property rights are assigned to him until the end of the agreement.
• Lessee. If the transport is registered in his name immediately upon registration of the transaction.

The conditions for imposing tax obligations on one of the parties are specified in the document. If they are absent, the transport tax during leasing may be paid by both parties, which will be a source of double taxation. Or it will lead to a complete absence of payments, since both parties will be confident that the other party to the transaction fulfills tax obligations.

Kv coefficient transport tax 2021 legal entities

Basic postulates of TN in a leasing transaction

So, the main legal documents regarding the payment of TN when leasing vehicles state the following:

• the obligation to pay the TN lies with the owner of the vehicle;
• the lessee or the lessor may be considered the owner, depending on the circumstances;
• the person in whose name the car is registered determines the agreement concluded between the parties to the leasing transaction;
• vehicle registration can be issued for a permanent period or only for the duration of the leasing agreement;
• The transport fee is paid by the owner regardless of the registration period.

How to determine the owner

The agreement specifies the nuances of the transfer of property into ownership under the terms of leasing. Upon conclusion of the relevant agreement, it may be owned by:

• the lessor - until the leasing term expires and all its conditions, especially financial ones, are met;
• lessee - on a permanent or temporary basis (depending on the agreement).

NOTE! If the registration of ownership of the car is temporary, you must provide a copy of the leasing agreement and an agreement on the temporary registration to the car control authorities (traffic police or others).

The parties themselves decide who will be the legal owner of the leased asset and formalize it in a contract or leasing agreement.

What to Consider When Choosing a Title Type

Before concluding a leasing agreement, you need to carefully weigh all the factors that could affect the value of the property being transferred and decide which agreement to transfer ownership of the car should be concluded. The following points are important:

1. Differences in transport tax rates in different regions of the Russian Federation. The Tax Code of the Russian Federation states that regional authorities can increase or decrease tariff rates up to tenfold. The tax on a car leased will be calculated according to the region of the property owner, because it will fall into the budget of this region. If the difference is significant, it is better to prefer a form of agreement in which the owner will be considered a person registered in a region with a more lenient rate.
2. Possibility to apply the benefit. The situation is similar to the situation with the tax rate - all other things being equal, the region of registration with tax benefits should be preferred.
3. Economic expediency . If you enter into a leasing agreement without taking into account all the key factors, this can significantly increase the cost of the property, while taking them into account will benefit both parties to the transaction.

IMPORTANT! Calculation and payment of TN is carried out in accordance with regional laws at the place of registration of the vehicle.

Is transport subject to corporate property tax?

There are no problems with individuals; all very simple vehicles are not subject to property tax in 2021.

But regarding legal authorities, many questions arise about who is obliged to pay movable property tax and for what, and who is granted benefits or exemption from paying duties.

Let's talk about everything in order.

As the Tax Code of the Russian Federation states, art. 374 after amendments were made in 2013, all movable property registered after January 1, 2013, and registered as a fixed asset, is not subject to duty.

This includes all units that have the third depreciation group in the classification rank. That is, machines that work usefully from 3 to 5 years.

As a result, accountants, referring to the amendment to the Tax Code when calculating the tax on movable property, did not include this type of transport.

But in 2021, the Tax Code has changed, and in Art. 374. it says the following: units that belong to the first and second depreciation groups (operation of cars from 1 to two years, and from two to 3 years) are not those that are subject to taxation.

That is, the changes affected the registration date and time of registration of units for organizations.

Accordingly, all institutions do not have to pay movable property tax, even if the car was purchased and registered before January 1, 2013. But this concerns the first two groups, what to do with the third?

As stated in the Tax Code Art. 381 “Tax benefits”, then this type of transport falls under preferential taxation. That is, the tax is required, but is not paid as a result of the provision of benefits prescribed in tax legislation.

In other words, companies do not need to pay tax on movable property purchased after January 1, 2013.

Transport tax accounting for car leasing

If a leased vehicle is used for the main activity of an individual entrepreneur or organization, then the transport tax will apply to expenses for ordinary activities (clause 5 of PBU 10/99, approved by Order of the Ministry of Finance of Russia dated May 6, 1999 No. 33n).

It is reflected in the debit of account 20 “Main production” and the credit of account 68 “Calculations for taxes and fees”.

When a transfer of TN is made, it is registered in the debit of account 68, the corresponding account is 51 “Current accounts”.

Who pays property and transport taxes under a leasing agreement?

• car cost;
• year of issue.

The odds are as follows:

• if the car was produced more than three years ago and its cost is 3-5 million, then the rate is 1.1;
• if released two years ago and cost 3-5 million – 1.3;
• if released before one year ago and costs 3-5 million - 1.5;
• if the car was produced up to 5 years ago and its cost is 5-10 million, then an increasing rate of 2 is used;
• if the car was produced within 10 years and costs between 10-15 million, then the coefficient will be 3.

Rate 3 is the maximum coefficient; it is also used for cars whose price is 15 million or more, produced before 20 years ago.

Taxation of corporate profits and car leasing

Transport tax is a recognized expense of the organization. It should be taken into account when calculating income tax, not only the amount of tax itself, but also the advance payment for it. Accounting is carried out on the date of accrual as part of “other expenses associated with production and sales”.

RESULTS

1. The parties to the leasing transaction, by their own will, determine who will be registered as the owner of the vehicle, at what point this right begins and for how long it is valid.
2. Transport tax is paid by the lessor if ownership of the car is transferred to the recipient only upon fulfillment of all the conditions of the leasing agreement.
3. Transport tax is paid by the lessee if the car is re-registered in his region on a permanent or temporary basis.
4. The calculation procedure, deadlines and reporting for payment of TN depend on the rules adopted in the region of registration of the vehicle.
5. The owner of the leased property bears not only the obligation to pay the technical tax, but also responsibility for late payments or reporting, arrears or non-payment, as well as for the lack of registration of the car transferred under the leasing agreement.