CJEU: Leases with option to purchase considered delivery of goods?

There are various forms of leases from a tax perspective. For VAT, the crucial question is whether, after the end of the lease term, the ownership title to a leased asset is automatically transferred from the lessor to the lessee. If this is the case, such a lease is considered the delivery of goods and thus subject to VAT on a one-off basis upon delivery. If not, it is regarded as a service. For leases with the option to purchase where the transfer of the title to a leased asset is only one of a number of options, VAT is paid on each individual lease instalment. In the Court of Justice of the EU’s opinion, the existence of a mere option to buy does not suffice. Other criteria must be met to treat a lease as the provision of services.