“I'm not sure I'm following. So you buy a Lamborghini for 230k excluding VAT.
And you sell it for 150,000 after 4 years. You mean 150,000 VAT included or excluded? "
Obviously VAT included, when you are a renter company you buy without VAT but obviously when you resell it is with VAT.
“A drop from 230k to 150k seems very small, but I don't know anything about that type of car. So you still lose at least 80k, 20k a year. "
I don't make the market rules, today a Lamborghini that 3 years ago cost 300k (except special models) is worth like 150k.
"But can you get a tax deduction because you've set a high monthly rent?"
We are not talking about high tax deduction, but about simplified management costs.
Being able to afford a Lamborghini does not necessarily mean paying it back in full every 4 \ 5 years (due to the different insurance costs and taxes in some states).
If in Italy for example you spend 17k a year for stamp duty and insurance and tax (nothing else) and then is an allert for your private income, if we want to take into consideration maintenance costs or changes, fuel etc ... if you open a rental company in
Bulgaria, which rents you that specific vehicle, for example at 10 € per day, you will pay 300 € per month of rental fee per month, 1600 € per year, so it becomes easy to understand what you save, maybe becouse you can collect this 1600€ like a cost.
If then we consider that the operating profit on the company in Bulgaria pays 10% of taxes, the scenario becomes simple to understand.
"What is a corporate expense for the other company that rents the car?"
It depends on what you want to do, if you want to manage your private garage, the price is up to you according to your needs, if you really want to offer a service to the public, you have to deal with your new competitors.
"And the car rental company has a small profit, so there are almost no taxes?"
The company always has profits on the proceeds, then it is up to the accountant, with the depreciation, to manage the profits on the
investments.
In any case, you pay 10% as a company on the profit, and if you take
dividends you need to pay an additional 5%.
"What exactly is the advantage then?"
You are able to contain the costs of purchase, maintenance, management, pay 10%
corporate taxes on profits, purchase without VAT, if then you have a company where that machine is amortizable or deductible, then you save on the whole line.
"Surely the other company could simply buy or rent the car directly?"
Obviously if you are a rental company, you buy, sell and rent vehicles, it is up to you what you want to do.
"I still don't see how that car pays for itself."
Example
Vision Italy:
Buy: 300k
Assurance, tax, etc: 17k year
Ordinary maintenance: 10K year
Extraordinary maintenance: 10k year
Gasoline x 10000km: 3.5k year
Summer tires: 3.5k year
Winter tires: 5k year
Total annual fixed costs on a Italy basis: 49k per year
Vision Bulgaria:
Buy: 240k
Assurance, tax, etc: 1.7k year
Ordinary maintenance: 5K year
Extraordinary maintenance: 5k year
Gasoline x 10000km: 3.5k year
Summer tires: 3.5k year
Winter tires: 5k year
Total annual fixed costs on a Bulgaria basis: 23.7k per year
Now already only in terms of maintenance costs, you save about 25k per year, (and I calculated only 10000 km per year) compared to a vehicle management not in Bulgaria, then you must consider that when your foreign company rents you the vehicle from Bulgaria, the rental in some cases can be considered a cost (at 30% or even up to 100%, depending on what type of company you are), and the costs of fuel, tires, changes, falling under the rental contract, can give you additional parameters of analysis.
"It's a little confusing ..."
I hope it is clearer to you now
. They come second only to blind followers of EPB and Peter Schiff.
