| Why are these leases tax free? The answer is interesting.
The manufacturer does make some small profit in selling one of these leases to you, but
their major profit comes after you return the vehicle, when they in
turn sell the vehicle to a rental company or to a
private buyer on the open market. You see, there is a law in France that
applies a considerably lower sales tax to vehicles which have (on paper at least) been owned for
a minimum of 17 days. Renault, for one,
enforces a slightly longer, 21-day minimum (again, on paper at least) for
these leases.
The short-term auto lease
program allows the likes of Renault to put many thousands of such vehicles on the market,
thus lowering the effective cost of their vehicles compared to the
competition, and hence increasing sales. Of course the French
government likes to see its major manufuacturers selling
literally lots of vehicles, and it likes to encourage tourists
to visit France, so it extends a separate law to make these leases
tax-free on the condition that only non-full-time-residents (in contrast
to citizens) of France may
purchase such lease.
By the way, have you heard about the alliance between Renault and Nissan?
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