There are four ways to get a company car: outright purchase, closed-end finance lease, open-end finance lease, and rental (operating lease). There is no single answer that fits everyone – but three questions decide it: is the VAT deductible, how much capital does it tie up, and who bears the operating burdens and the residual-value risk. Purchase and closed-end leasing give you ownership, but as a rule the VAT on the purchase price is not deductible, and your capital sits in the car. Open-end leasing is better on the VAT side – but you are still on your own with the operations. That is why it makes no sense to put a long-term rental fee in the same column as a lease instalment: beyond financing, the rental fee includes every operating cost – all you have to do is refuel.
The four forms, in one minute
- Outright purchase – the full purchase price leaves the company immediately. You get ownership; in exchange everything else – taxes, insurance, servicing, tyres, selling the car at the end – is your job and your risk.
- Closed-end finance lease – purchase by instalments: at the end of the term the car automatically becomes the company's. For VAT purposes it is treated as a sale from the outset.
- Open-end finance lease – at the end of the term you can decide: buy at residual value or hand it back. For VAT purposes it qualifies as a rental, so the VAT on the instalments is proportionally deductible.
- Rental / operating lease – the car remains the provider's property; you pay for the use. This is where the market splits in two: financing-only operating leases (operations stay with you) and full-service long-term rental, where operations are included.
VAT: this is where most of it is decided
As a rule, the VAT on the purchase price of a passenger car cannot be deducted – this deduction ban affects outright purchase and closed-end leasing alike. On a car with a gross price of HUF 20 million, that is roughly HUF 4.3 million in non-reclaimable VAT.
A rental or open-end lease fee is a different category: it is a rental service, and under current rules 50% of its VAT is deductible even without a trip log; beyond that, the deduction can be claimed in proportion to documented business use. With us, the trip log needed for this is part of the monthly fee, at no extra charge – we cover it in a separate article.
Why can't a rental fee be compared to a lease instalment?
Because they price different products. A lease instalment (and the fee of a financing-only operating lease) contains one thing: financing. Everything else comes on top, out of your time and money. Our rental fee, by contrast, includes:
- Company car tax and vehicle tax – for a higher-powered (above 120 kW), modern-rated company car, the company car tax under NAV's (the Hungarian tax authority's) indexed 2026 table is HUF 51,000 per month;
- Mandatory third-party liability insurance (MTPL) – around HUF 10,000 per month on a typical company average;
- Comprehensive damage protection and claims handling – on the market, comprehensive damage insurance costs 2.5–3% of the car's gross value per year: on a HUF 15–20 million car that is several hundred thousand, up to a million forints a year. With us this is replaced by the contractual damage-cover scheme;
- Servicing and maintenance – backed by our parent company, Bavarian Classics, an authorised BMW Service Centre, with proactive scheduling;
- Wheels and tyres – purchase, seasonal change, storage, replacement due to wear;
- A monthly trip log for VAT reclaim, assistance, and the availability guarantee.
Just the first three, easily quantifiable items above amount to HUF 90,000–120,000 per month – costs that arise on top of the instalment with a leased car, not to mention the organisational work. If you compare a rental offer with a lease offer, all of this belongs in the lease column. With us, beyond the fee you have exactly one car-related cost left: fuel or charging.
"But I bought it, it's mine" – on capital tied up
In Hungarian SME thinking it is a strong argument that a purchased car is an asset. That is true – but two questions are worth asking:
- With a purchase or a lease, typically 20–40% of the car's value leaves the company immediately as a down payment. If that amount stayed in your business and worked there – in inventory, capacity, people – would it not produce more than what it is worth sitting in the car?
- And if there happens to be no use for it in your business right now: at a moderately conservative bank or government-bond yield, how much would the same amount earn over the term? The car, meanwhile, is certain to lose value – the only question is who bears that loss.
With rental there is no down-payment-style capital tie-up: your capital stays in your company, and the depreciation risk is ours.
An off-balance-sheet item
For companies reporting under the Hungarian Accounting Act, long-term rental appears in the balance sheet neither as an asset nor as a credit-type liability – the rental fee is simply an expense. (For companies reporting under IFRS, IFRS 16 treats leases differently.) That means better gearing ratios and untouched credit capacity: towards your bank, your company is not "loaded with car loans", and you can use your credit line for what actually produces.
An honest comparison is not putting a rental fee next to a lease instalment – it is writing every cost, the price of capital and the risks into every column. We are happy to run this calculation for your specific situation.
This article is general information, not tax or financial advice. The optimal structure for your company is best decided together with your accountant and tax advisor.
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Frequently asked questions
So is rental always the best choice?
No, and we do not claim it is. If ownership matters to you, your mileage is very low, or you have plenty of free capital, purchase or leasing can be a good solution. Rental is strong where capital is worth more in the business than in the car, and where you want to spend neither people nor time on operations.
VAT is deductible with an open-end lease too – so what is the difference?
The VAT side is indeed similar. The difference is everything else: with a lease, the taxes, insurance, claims, servicing, tyres and the end-of-term sale all remain your job and your risk. In a fee comparison, all of that has to be added in.
I have an operating lease with a financial provider. Isn't that the same?
On the financing and VAT side, yes, it is similar. But if the service is financing only, you are just as alone with operations as an owner would be: service appointments, claims, wheel changes, tax filings. That is precisely the extra in full-service long-term rental: complete operations in a single fixed monthly fee.
At the end of a lease the car is mine – isn't that worth more?
At the end of the term you have a several-year-old used asset, whose sale, accumulated depreciation and condition risk are all yours. With rental, the residual value is our risk – we cover this in a separate article.
Exactly how much VAT can I reclaim from the rental fee?
50% of the fee's VAT is deductible even without a trip log; above that, in proportion to documented business use. The trip log we provide at no charge supports exactly this – your accountant can give a definitive answer on the specific deduction.
