General interpretation – changes in leasing contract

On 15 February 2021 the Minister of Finance, Funds and Regional Policy issued a general interpretation referring to possible changes to the content of leasing contract and their impact on the manner of qualification in income tax. In the interpretation a list of modifications has been indicated which on the basis of income tax laws shall not cause any violations of conditions for regarding a given contract as operating or financial lease. The changes to the lease agreement may concern in particular changes to the schedule of payments.

The general interpretation of the Minister of Finance also discusses a situation when changes in the content of contract are connected with altering parties to this contract by assignment of rights or by starting a lease relationship. In the case of such a modification, the basic contract period is considered as kept if other provisions of the contract have not been altered. The Minister of Finance has confirmed that altering “other provisions of a contract” means a change as a result of which the contract would cease to fulfil the conditions for regarding it as the leasing contract for tax purposes.

At the end of the interpretation they refer to the issue of the correct establishment of a revenue amount on the side of the financing entity in the case of selling the object of lease. The Minister explains that the revenue of the financing party is a value expressed in the price specified in the contract; pointing out, however, that if the selling price is at the level of capital value unpaid by the user, one should assume that it corresponds to the market value.

Source: General interpretation No. DD6.8202.4.2020 of the Minister of Finance, Funds And Regional Policy dated 15 February 2021.

1. General interpretation – changes in leasing contract