Own contribution when leasing - how to book?


Entrepreneurs planning to buy a car that will be used in their business activities often decide to lease. It is one of the most frequently chosen forms of external investment financing. However, when planning to buy a vehicle under leasing, it is worth considering which form of leasing to use. First of all, you should take into account the specifics of your business, and then consider the tax benefits of the selected type of leasing. It should also be remembered that the selected form of leasing depends on the obligation to pay an initial fee, also known as a handling fee or own contribution. Therefore, the question often arises of how to account for the own contribution when leasing. The discussed problem will be presented on the basis of fictitious entrepreneurs struggling with the problem of including own contribution in company costs (initial or handling fee).

What is leasing?

Leasing is a civil law contract under which the lessee can use the property belonging to the lessor (leasing company). In return, it pays fees to the lessor, incl. in the form of leasing installments. At the beginning of the lease, the lessee also pays the so-called initial payment (handling fee), also known as own contribution, representing several dozen (approx. 20-40) percent of the value of the leased asset. Own contribution for leasing and its amount depends on its type. The duration of the lease is strictly defined in the contract and usually lasts several years. After this time, the lessee can usually purchase the asset for a relatively small amount.

The subject of the lease can only be a thing - usually these are:

  • consumer objects,

  • investment facilities,

  • real estate.

The entrepreneur can choose from three forms of leasing: operating leasing, financial leasing and leaseback. Each of them will be briefly discussed below.

Lease agreement

Leasing agreement in accordance with Art. 709 of the Civil Code should be concluded in writing under pain of nullity. In a situation where the leasing contract concerns real estate and includes an annotation about the transfer of ownership after the performance of the leasing contract, the form of a notarial deed is required. It should also be remembered that the leasing contract cannot be concluded for a period shorter than 2 years and longer than 7 years.

Elements of the leasing contract

Pursuant to Art. 709 for leases the financing party undertakes, in the scope of the activities of his enterprise, to purchase the item from the designated vendor under the conditions specified in this contract and return this item to the user to use or use and collect benefits for a specified period of time, and the lessee undertakes to pay the financing party in the agreed installments a monetary remuneration equal to at least the price or remuneration for the purchase of goods by the financing party.

According to the mentioned article, the leasing contract should contain:

  • obligation of the user to pay the financing party's remuneration in fixed installments,

  • the financing party's commitment that it will purchase a specific item from a specific person under the terms agreed in the contract,

  • the financing party's obligation to hand over the leased object to the user for the duration of the lease.

Financial leasing

In the case of financial leasing, the leased item is classified as the entrepreneur's corporate property and is responsible for making depreciation charges.

The entrepreneur may include as tax deductible costs:

  • costs of using the leased object,

  • the percentage of installments,

  • depreciation write-offs.

In most cases, with this type of leasing, VAT is charged in advance upon handing over the subject of the contract. VAT is deductible (50% or 100%) by the user, provided that it is paid and the subject of leasing is used for the purposes of taxable activity.

An important aspect is also the fact that the entrepreneur becomes the owner of the leased item only after paying the last installment.

Operating lease

In the case of operational leasing, the subject of the leasing is included in the assets of the lessor (financing party), and thus - it is obliged to make depreciation write-offs.

The entrepreneur may include as tax deductible costs:

  • costs of using the leased object,

  • leasing installments,

  • initial (handling) fee, also known as own contribution.

As a rule, operating leasing is treated as a service, therefore VAT is charged on each leasing installment and is deductible (50% or 100%) by the user, provided that the leased object is used for the purposes of taxable activity.

After the end of the leasing contract, the lessee can purchase the used vehicle at a preferential price.


Its specificity consists in selling a fixed asset by the enterprise to a leasing company and then leasing it out. In this way, the company can continue to use the measure, and at the same time gains cash for operations. The main purpose of concluding such an agreement, from the perspective of the user, is of course to release the frozen funds so that they can be used, for example, for other investment purposes, while maintaining the possibility of using the fixed asset.

Reverse lease may take the form of both operating lease (individual lease installments will be the cost of obtaining revenues for the user) and financial leasing (the user will make depreciation write-offs on the fixed asset, and its tax cost, in addition to the depreciation write-off, will be the interest part of each installment).

Own contribution when leasing

Own contribution when leasing is nothing more than an initial fee, also known as a handling fee, zero fee or initial rent. This fee is a one-off expenditure related to the conclusion of the leasing contract, and, consequently, the release of the subject of the lease itself.

The value of own contribution has a large impact on the amount of leasing installments - the higher the own contribution, the lower the installments for the leased item.

Entrepreneurs often ask how to include this type of leasing fees in the system.

If the entrepreneur receives an invoice from the leasing company containing an initial fee, often called own contribution by entrepreneurs, it should be included in the company costs in accordance with the date of issue of the document, provided that the leased item is used for business purposes.

Start a free 30-day trial period with no strings attached!

Example 1.

Mr. Emil, who runs a sole proprietorship and is an active VAT taxpayer, has signed a lease agreement for a passenger car under operating lease. He received his first car leasing invoice containing an initial payment, also known as an own contribution. Mr. Emil's doubts are raised by the way the invoice is included in company costs.

Mr. Emil should post the invoice containing the initial fee as tax deductible costs on the date of issue of the document. Other invoices containing leasing installments should be included in company costs on the same terms, i.e. under the date of issue of the document.

When it comes to deducting VAT from the initial payment or leasing installments, Mr. Emil has two options: full or partial (50%) deduction of VAT. The method of deducting VAT depends on the fact that the leased passenger vehicle will be used only for company purposes or for company and private purposes. If Mr. Emil chooses the first option, i.e. use only for the purposes of his business, then after reporting the vehicle to the appropriate tax office on the VAT-26 form, he will be entitled to fully deduct VAT from the initial payment (the so-called own contribution for leasing) and leasing installments. Of course, he must also keep a detailed mileage note for VAT purposes. If Mr.Emil uses the leased passenger vehicle in a mixed manner, i.e. for both business and private purposes, he will be able to deduct only 50% of the VAT on the initial payment and leasing installments (the non-deducted VAT will be a tax deductible cost).

VAT on expenses related to the leased passenger car

It is worth noting that taxpayers are also entitled to deduct VAT in connection with the purchase of fuel and other expenses related to the use of a leased vehicle, such as repairs, inspections, tolls on the motorway, parts, etc.

If the leased passenger vehicle will be used both for business purposes and for private purposes (mixed use), the taxpayer is entitled to a 50% VAT deduction on the aforementioned expenses. If the vehicle is used solely for business purposes, it will be eligible for a full deduction of VAT on the aforementioned expenses, but only after certain conditions are met. These are:

  • vehicle registration on the VAT-26 form,

  • mileage mileage maintenance for VAT purposes,

  • creating regulations for the use of the vehicle.

Start a free 30-day trial period with no strings attached!

Operating lease at wFirma.pl

Depending on the chosen method of using the passenger leasing vehicle in the company (only business or mixed use), appropriate entries will be made in the VAT register (in the case of active VAT payers) and the KPiR.

In the wFirma.pl system, invoices documenting leasing installments for a passenger car should be entered into the system according to the scheme EXPENDITURE »ADD EXPENSE» VAT INVOICE »COSTS OF ACTIVITY» LEASING OR RENTAL OF A PASSENGER CAR.


Cars are the most common leased item, but it should not be forgotten that they are not the only one. Leasing also includes consumer facilities, investment facilities and real estate.

Invoices documenting leasing installments for items other than passenger cars should be booked according to the EXPENDITURE scheme »ADD EXPENSE» VAT INVOICE / INVOICE (EXCLUDING VAT) »OPERATING COSTS» LEASE OR LEASE.

This scheme is also used if the car leasing allows for 100% VAT deduction.

The entry will go to the VAT purchase register (in the case of active VAT payers) and the KPiR.