Renting: basic features

Renting is an agreement allowing use of an asset in exchange for predetermined payments. As well as being available from banks and specialist companies, medium- or long-term rental arrangements may be offered by a division or subsidiary of the manufacture

  • This type of arrangement is available to anyone, not just businesses.
  • The rental company usually either has the rented asset in stock or buys it to rent, but retains ownership.
  • The terms and conditions of the agreement can be determined by the parties, as long as they comply with the Spanish Civil Code and Code of Commerce. Therefore, coverage, duration and any early termination penalty must be stated in the contract.
  • Rental contracts do not include the option to purchase the goods. This makes this type of arrangement particularly suitable for goods that depreciate rapidly and have a low residual value at the end of the rental period, such as vehicles, computer equipment, machinery or furniture.
  • A rental contract is not considered a financial product, so is not subject to specific regulations or supervisory requirements.
  • Renting may be an attractive option for items that may otherwise be unaffordable or because of the extra services offered.
  • Rental payments are tax-deductible for businesses provided the goods acquired are entirely used for the normal activities of the business. By contrast, rental payments are not tax-deductible for individuals and are subject to VAT.

Expenses

  • Fixed monthly payments: Defined in the rental agreement for the entire duration.
  • Applicable taxes: VAT on agreed monthly payments.
  • Compensation: For early cancellation of the renting agreement.
Did you find this information useful?