Tax treatment of a sale and leaseback in relation to IFRS
I have formed an investment deduction amount and made a purchase (photovoltaic system) within 3 years. I bought this from a specialized company. I financed it through VR Leasing as a sales and leaseback. VR entered into the purchase contract and paid the remaining amount minus my equity. I pay a monthly installment plus VAT over 144 months. The down payment was 10%, the residual value is 10% each net. The net purchase price was 12,481 euros. The installment is net 99.64 for 144 months. The system is installed on a rented roof and was configured for this roof. The lease contract is in my name. At the end of the term with VR, the right to operate the system there also ends. The risk of operation lies with me, as I also have to pay for maintenance, upkeep, and insurance. In the contract with VR, it is stated in the fine print, among other things: "During the term of the contract, the acquisition costs as well as the ancillary costs including the financing costs up to the residual value are not fully covered. The customer does not have an acquisition right at the agreed residual value." (last sentence printed in bold).
The tax office now wants to retrospectively not recognize the purchase and retroactively cancel the investment deduction.
Referring to the Federal Fiscal Court rulings of 06.04.2016 and 27.11.2016, I have argued that I am the economic owner. Referring to the leasing decree of 19.04.1971, I have pointed to the economic assignment.
The tax office insists on its own opinion and justifies this with:
a. Partial amortization contract with call option - hence assignment to LG
b. I would have to prove that LG did not account for it
c. Referring to a ruling of the Cologne Fiscal Court, it is stated that this is not binding
d. Special leasing is not present - also no financial leasing because
- in the basic lease period, the installments would not cover the acquisition costs as well as all ancillary costs including financing costs
Regarding VAT, it should be noted that the tax office had denied the input tax deduction from the purchase, I had to pay the VAT from the installments in advance and can only claim VAT from the installments.
Best regards
