For freelancers and self-employed professionals in Belgium, the best option between financial leasing, operational leasing, renting, and buying a car depends on your cash flow, balance sheet preferences, and how much flexibility you need. In this article, you will find a breakdown of each option, including how to record it correctly in Accountable.
1. Financial leasing, operational leasing, renting or buying: the differences
Characteristics | Financial leasing | Operational leasing | (Financial) Renting | Purchase |
Duration: | Generally long-term | Generally short-term | Generally short-term | Long-term |
Ownership: | Leasing company | Leasing company | Leasing company | The buyer |
Costs related to maintenance, insurance, taxes, etc. | The lessee | The lessee | The renter | The buyer |
Amortization | ✅ | ❌ | ❌ | ✅ |
Purchase option | Yes | Depending on the contract | Yes | / |
Category in Accountable | Financial leasing contract & Financial leasing monthly invoice | Operational leasing | Car rental or financial renting | Purchase of car |
2. Leasing
There are two main types of leasing:
Financial leasing
Operational leasing
The main distinction between financial leasing and operational leasing is who holds ownership of the asset.
2.1 Financial leasing
Financial leasing is a financing solution (similar to a loan) where a leasing company acquires an asset and makes it available to the lessee, usually a business or an independent professional. The leasing company remains the legal owner, but not the economic owner.
With financial leasing, the asset is recorded on the lessee's balance sheet, which means it can be depreciated (for example, over five years) as if the lessee were the owner. Each leasing invoice separates the principal portion from the interest, reducing the debt associated with the asset and enabling clear management of assets and depreciation on the balance sheet.
Financial leasing contracts generally include a purchase option at the end of the contract for up to 15% of the investment value of the asset.
VAT consideration: with financial leasing, VAT payments are spread over the duration of the lease contract, unlike direct purchases where VAT is paid in a single instalment. VAT is distributed across monthly invoices, reducing the initial financial burden and allowing partial recovery through VAT returns.
💡 Financial leasing gives freelancers and independent professionals financial and accounting flexibility: you can use an asset without a large upfront investment, with the option to acquire it at the end of the lease.
🚨 In Accountable, financial leasing is recorded in 2 (or sometimes 3) steps:
The initial leasing contract should be added under the category Vehicle > Automobile > Financial leasing contract, to allow the amortize of the car’s total value (only the amount excluding VAT).
Each monthly invoice should be recorded under Vehicle > Automobile > Financial leasing monthly invoice only for the amount corresponding to the capital repayment. Only the VAT portion will be partially deductible.
If your invoice includes interest on the finance lease, this should be entered in the Interest and bank charges category. The same applies if the invoice includes insurance -> category: Vehicle > Automobile > Insurance. And also for maintenance -> category: Vehicle > Automobile > Maintenance and repairs.
💡 To do this, you'll need to click on “split expense” so that you can encode the amounts in the corresponding categories.For each category, you'll need to create an item in the expense.
Purchase Option: If you decide to opt the purchase option, the final invoice should be recorded under Car Purchase.
Remember to link the vehicle to each of these expenses and select the % of professional use.
💡 If you have a Utility vehicle, remember to select the category Vehicle > Utility Vehicles > Financial Lease Contract or Monthly Financial Lease Invoice.
Each monthly invoice should be recorded under Vehicle > Utility Vehicles > Financial leasing monthly invoice only for the amount corresponding to the capital repayment. Only the VAT portion will be partially deductible
If your invoice includes interest on the finance lease, this should be entered in the Interest and bank charges category. The same applies if the invoice includes insurance -> category: Vehicle > Utility Vehicles > Insurance. And also for maintenance -> category: Vehicle > Utility Vehicles > Maintenance and repairs.
💡 To do this, you'll need to click on “split expense” so that you can encode the amounts in the corresponding categories.For each category, you'll need to create an item in the expense.
🚨 For a Utility vehicle, the system does not require you to register the vehicle in the system!
2.2 Operational leasing
With an operational leasing contract, the leasing company retains both the legal and economic ownership of the vehicle, and manages its acquisition, insurance, taxes, maintenance, and repairs. All these costs are included in the monthly invoice and can be adjusted during contract negotiation. Unlike financial leasing, this type of contract is not treated as an investment for the lessee: the vehicle cannot be depreciated on their balance sheet, and payments are recorded as business expenses. Options such as insurance, maintenance, and repairs are generally included, and the lessee can add extra services such as a replacement vehicle, roadside assistance, winter tyres, or a fuel card.
Operational leasing contracts generally include a purchase option set at more than 15% of the investment value of the asset.
For operational leasing, your monthly invoice is calculated based on the selected options, the contract duration, and the agreed mileage. Throughout the contract, the leasing company keeps you informed of the vehicle's condition and required maintenance, so you can monitor variable costs and avoid unexpected expenses.
VAT consideration: with an operational lease, VAT is spread across the leasing period and included in monthly payments, so there is no need for upfront financing. This VAT can be reclaimed when submitting your VAT return.
💡 Operational leasing is particularly suitable when:
You want to keep the leased asset off your balance sheet.
You prefer to record lease payments as operating expenses in your income statement.
Purchasing the asset at the end of the contract is not a priority.
🚨Your monthly operational lease invoice should be added in the Expenses tab under the category Vehicle > Automobile > Operational leasing.
If the invoice includes insurance -> category: Vehicle > Automobile > Insurance. And also for maintenance -> category: Vehicle > Automobile > Maintenance and repairs.
💡 To do this, you'll need to click on “split expense” so that you can encode the amounts in the corresponding categories.For each category, you'll need to create an item in the expense.
Remember to link the vehicle to each of these expenses and select the % of professional use.
💡 If you have a utility vehicle, don't forget to select the category Vehicle > Utility Vehicles > Operational leasing.
If the invoice includes insurance -> category: Vehicle > Utility Vehicles > Insurance. And also for maintenance -> category: Vehicle > Utility Vehicles > Maintenance and repairs.
💡 To do this, you'll need to click on “split expense” so that you can encode the amounts in the corresponding categories.For each category, you'll need to create an item in the expense.
🚨 For a utility vehicle, the system does not require you to register the vehicle in the system!
3. Financial renting
Renting is a form of leasing where you do not acquire ownership of the vehicle, so it is not treated as an investment for your business. The vehicle does not need to be recorded on your balance sheet, which means it does not affect your level of debt. The leasing company retains both the legal and economic ownership of the vehicle.
When you opt for renting, you enter into an agreement with a leasing company to lease a company car, setting the contract duration, maximum mileage, and cost in advance.
Rental payments are treated immediately as operational expenses, with no possibility of depreciation. The lease expense is directly deductible.
Depending on the contract conditions, there may be an option to purchase the vehicle at the end of the renting period, usually with a buyout option set at a minimum of 16%.
VAT consideration: with renting, VAT works similarly to leasing. VAT is spread across monthly payments, with the possibility of partial recovery through your VAT return. Note that VAT deduction is limited, as the vehicle is considered for mixed use, which affects the available deduction methods.
💡 Renting is not treated as an investment, so the vehicle does not appear as an asset on your balance sheet. Related costs are recorded directly as expenses. Renting periods are also typically shorter than leasing contracts, allowing faster deduction of vehicle costs.
🚨The renting invoice should be added in the "Expense" tab under the category Vehicle > Automobile > Car rental or financial renting.
If the invoice includes insurance -> category: Vehicle > Automobile > Insurance. And also for maintenance -> category: Vehicle > Automobile > Maintenance and repairs.
💡 To do this, you'll need to click on “split expense” so that you can encode the amounts in the corresponding categories.For each category, you'll need to create an item in the expense.
Remember to link the vehicle to each of these expenses and select the % of professional use.
💡 If you have a utility vehicle, don't forget to select the category Vehicle > Utility vehicles > Utility vehiclesrental or financial renting.
If the invoice includes insurance -> category: Vehicle > Utility Vehicles > Insurance. And also for maintenance -> category: Vehicle > Utility Vehicles > Maintenance and repairs.
💡 To do this, you'll need to click on “split expense” so that you can encode the amounts in the corresponding categories.For each category, you'll need to create an item in the expense.
🚨 For a utility vehicle, the system does not require you to register the vehicle in the system!
🚨 🚨 With financial renting, you generally receive a first invoice with a higher amount. Record this invoice under the category Vehicle > Automobile or Utility Vehicles > Car rental or financial renting.
4. Purchasing a vehicle
Buying a vehicle for business use is treated as an investment and must be depreciated over its economic lifespan. Tax regulations require a minimum depreciation period of five years for a new vehicle and three years for a used vehicle.
VAT consideration: a portion of VAT can be reclaimed through your periodic VAT return, and the remaining amount is depreciated along with the vehicle. On resale, any gain is subject to taxation, while a loss can be deducted.
💡 For vehicles, VAT deduction is set at a legal flat rate of 35% and can go up to 50%.
Advantages of purchasing a vehicle:
💡 Purchasing is generally more cost-effective: you have the freedom to choose your own garage, insurer, and other providers, and you avoid the additional costs often bundled into leasing or renting contracts, such as fuel and taxes.
🚨 Record the purchase invoice for your vehicle under the category Vehicle > Automobile > Purchase of a car.
Remember to link the vehicle to the purchase invoice and other related expenses, and select the % for business use.
💡 If you have a utility vehicle, select the category Vehicle > Utility vehicles > Purchase of a utility vehicle.
🚨 For a utility vehicle, you do not need to register the vehicle in the system.
Key takeaways
With financial leasing, the asset appears on your balance sheet and can be depreciated. VAT is spread across monthly invoices and partially recoverable.
With operational leasing, the vehicle stays off your balance sheet and payments are recorded as operating expenses. Maintenance and insurance are typically included.
Financial renting works similarly to operational leasing but with shorter contract periods and no balance sheet impact. A purchase option is usually available at a minimum of 16%.
Purchasing a vehicle gives you full ownership and the most flexibility in choosing providers, but requires upfront investment and depreciation over at least five years (new) or three years (used).
Always link the vehicle to its expenses in Accountable and specify the percentage of professional use.
Need help? Chat with us or email support@accountable.eu, we're happy to help.