Although some time has passed since the introduction of the MDR regulations, some taxpayers are still surprised to receive information from lessors that:
- they reported the leasing contract as a standardized tax scheme, therefore
- they included the concluded agreement in the MDR-4 quarterly reporting, which is why
- it is the beneficiary who should consider whether a tax advantage has arisen here and whether he meets the other reporting requirements (mainly the criterion of a qualified beneficiary), which means that in such a situation
- one should submit the MDR-3 information.
How should the user react?
First of all, check whether the criterion of a qualified user applies to it. If it is not met, no reporting obligations will arise.
The criterion of a qualified user is met if:
- income or costs exceed the equivalent of EUR 10 million;
- the arrangement made available or implemented concerns items or rights with a market value exceeding the equivalent of EUR 2.5 million;
- the user is an entity related to such entity.
A leasing contract – in theory – may involve tax benefits (e.g. as an alternative to purchase).
There are also specific situations, such as “mass” conclusion of leasing contracts in 2018, so as to make it before the amendment of the regulations to less favorable ones.
Therefore, some lessors, in order not to have to assess individual cases, have adopted an approach whereby:
- report the operating lease agreement as the so-called standardized scheme (i.e. possible to be implemented by many entities);
- as a result, they report any contracts with clients.
In this case, the financing party does not have to submit separate notifications for each client, and the lessor himself is, in a way, “released” from the burden of examining whether a given contract was used by his lessee to achieve a tax advantage. At the same time, each client receives such a letter from the financing party and must decide for himself whether he concluded the agreement for the purposes of tax benefits, which means that he should independently report the tax scheme.
Therefore, if one of the significant purposes of concluding the analyzed agreement was to obtain tax benefits, the user should report the tax scheme.
As for the legal grounds for such an approach, it should be pointed out that pursuant to Art. 86a §1 point 10 of the Tax Ordinance, a tax scheme is an arrangement which:
- meets the criterion of the main benefit and has a general hallmark (potentially to be considered here);
- has a special hallmark, or
- has another special hallmark.
In turn, reconciliation is a set of related activities that have or may have an impact on the creation or non-occurrence of the tax obligation (Article 86a § 1 point 16 of the Tax Ordinance).
The lease agreement meets the definition of reconciliation.
The main benefit criterion is defined in Art. 86a § 2 of the Tax Ordinance. The criterion of the main benefit is considered to be met if, based on the existing circumstances and facts, it should be assumed that an entity acting reasonably and guided by lawful objectives other than obtaining a tax advantage could reasonably choose a different course of action, which would not involve obtaining a tax advantage reasonably expected or resulting from the implementation of the arrangement, and the tax benefit is the main or one of the main benefits that the entity expects to obtain from the implementation of the arrangement.
Whether an arrangement meets the main benefit criterion is often highly debatable. However, the starting point may be a kind of “self-assessment” of the user, especially what (business) motives were behind the conclusion of a given leasing contract.