Long-term car rental: what it is, how it works, who is it convenient for

Among the different forms of use of a vehicle, long-term car rental is an alternative formula that is constantly growing, with plans dedicated to both VAT numbers and individuals. A user guide with all the details

Long-term car rental appeals to both companies and VAT numbers and – more recent trend – to private customers. A result highlighted by the number of registrations dedicated to this specific channel: in 2019 there were 281,884 out of a total of 1,926,535, with a market share of 14.6%, up compared to 13.6% in 2018. cars for a medium-long period – typically from 24 to 60 months – is a possibility that initially was aimed only at companies and professionals, but in recent years formulas dedicated to individuals have grown exponentially, who have different needs than those who make of the car a work tool.

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HOW LONG TERM RENTAL WORKS

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In the case of long-term rental, the car is purchased by the lessor, who in turn grants it to the tenant – the customer or driver – for a monthly rental fee. The driver has the possibility to choose the vehicle and customize it according to their needs, exactly as it happens in the case of purchase. The rental fee includes all services related to the use of the car: insurance (Rca, Fire & Theft and Kasko), ordinary maintenance (coupons) and extraordinary (breakages and breakdowns), property tax. Then there are a series of additional services dedicated in particular to those who use the car as a work tool: vehicle in pre-assignment – to cover the period of time necessary to produce the car -, replacement car in case of breakdown or accident, fuel card, tire change and summer / winter management.

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ADVANTAGES FOR VAT NUMBERS

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The long-term car rental formula offers VAT numbers the possibility to define the budget dedicated to mobility through certain costs, since being a “Full Rent” formula, it includes all the expense items in the rent, even unforeseen ones such as accidents or mechanical breakages out of warranty. A second very tempting advantage is the fiscal one: renting allows companies to deduct the costs of using the vehicle and deduct the VAT depending on use. For vehicles intended for instrumental use it is possible to deduct 100% of the rental costs and 100% of the VAT. The deduction of costs depends on the type of use of the vehicle: if it is granted as a “fringe benefit” to an employee, 70% of the rental fee and 40% of VAT can be deducted. If it is not used exclusively for business purposes and it is not granted for use by an employee, the cost deduction drops to 20% (with a maximum of 3,615.00 euros per year) and the VAT deduction to 40%. In the event that the user is a commercial agent, the maximum deductibility of the financial portion is 5,164.57 euros, while the maximum deductibility of the portion referring to services connected to use is set at 4,131.66 euros. In this case, VAT is 100% deductible.

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LONG-TERM RENTAL FOR INDIVIDUALS

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As mentioned, born for companies and professionals, long-term car rental is now a reality also for private customers, even if consumers who opt to rent rather than buy a vehicle cannot benefit from the tax advantages granted to companies. A significant limitation, which can be offset by the greater ease of management of the vehicle allowed by the rental, an element that many private individuals find rewarding compared to the purchase. The car rental, in fact, in its most complete formulas includes in the rent all the expense items, including maintenance, insurance and road tax. No risk of a sudden breakdown necessitating an unexpected outlay and no risk of forgetting to renew insurance or pay property tax.

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