Fleet News

Funding decisions set for a revolution

FLEET funding decisions could be revolutionised by the tax and interest rate harmony brought by the European single currency which makes its debut on January 1. With immediate effect pan-European leasing suppliers will be able to quote in Euros using the same interest rate in the 11 Eurozone countries, significantly strengthening their sales proposition.

This will not translate into a single lease rate for an identical car in the 11 member states because external factors such as manufacturer pricing, taxes, maintenance expenditure and residual values will still be determined locally, but convergence pressures will be at play. Where the Euro will have an immediate impact, however, is in facilitating fleet policy setting, alongside single currency quotes, invoicing and management reporting, advantages much more readily accessed through arrangements with a pan-European supplier.

One of the keenest issues for fleets considering a pan-European solution is the direction of Eurozone taxes, and particularly corporation tax and VAT rates and recoverability. These are key determinants in fleet funding decisions, and are coming under mounting harmonisation pressures. Indeed, the driving forces behind the Euro, France and Germany, believe the Eurozone will only be able to talk about a genuinely single market when it has a single tax regime as well as a single currency.

Different fiscal policies have the power to undermine many of the benefits of the Euro, and consumers will vote with their wallets, buying products and services in the cheapest markets, and leaving suppliers at the mercy of Governments which impose uncompetitive taxes.

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