Planning a self-drive holiday in Europe? Have you considered leasing a vehicle instead of renting one? In this step by step guide to the tax-free vehicle leasing program in Europe I share the pros and cons and of this excellent option that is open to non-EU residents.
I'm heading back to Europe and it's time to hit the open road. I've planned our itinerary meticulously (I hope!!) and have decided that on this trip it will be more convenient to have our own car.
There are a few off-the-beaten-track places we'll be visiting and we're also looking forward to the spontaneity of making a detour if we feel like it and, hopefully, stumbling across some hidden gems.
We'll be starting this visit to Europe in Barcelona and finishing in Paris with a route including southern France and the Alps, northern Italy, southern Germany, Slovenia, Austria, Czech Republic and back into northern France.
As we'll need a car for 39 days, the best option for us was to take advantage of the Tax-Free Leasing program that a number of French car manufacturers offer. We have used this program before on a few occasions and have found it to be excellent value.
Some of the benefits of the tax-free leasing program include:
- Unlimited kilometres
- Full insurance with no excess (no added Collision Damage Waiver fees to pay)
- 24 hour roadside assistance
- Brand new car straight from the factory floor with a full factory warranty
- Guarantee you will receive the model you request
- Lower rates than regular car hire
- Additional drivers allowed for free (conditions apply)
- Driver doesn't need to be over 25 years of age
- You can take the car into some normally 'restricted' countries like Hungary, Montenegro, Bosnia-Herzegovina to name a few
- Choice of almost 30 locations in Europe and UK from which you can collect and return your vehicle
What is the tax-free vehicle leasing program?
The Leasing program is available for durations of between 21 and 175 days and is basically a system whereby you purchase a brand new vehicle with the guarantee that the manufacturer will 'buy it back' from you at the end of your contract.
Whilst that can sound a bit daunting and that you might have to fork out tens of thousands of dollars for a car, in actual fact, you're paying less than what you would for a hire car for the same period but you're getting a brand, spanking new vehicle which you just hand back at the end of your trip.
Collection and drop off at any of the depots in France is complimentary but fees do apply when you pick up and/or drop off your vehicle in other country. These fees can be reduced significantly if you are able to take advantage of the Early Bird offers (more info below) that are released each year.
Who is eligible for the tax-free leasing program?
The program is open to drivers aged 18 years or older who reside outside the European Union and hold a valid drivers' licence. The driver must not stay in Europe for more than 185 days in any consecutive 12 month period, and may not work during the period of the contract.
Full terms and conditions are shown on the website after you request a quote.
Early Bird offers
The tax-free leasing program is great value year round but the manufacturers participating also bring out Early Bird offers each year. Early Bird offers usually include free days (ie. lease/pay for 21 days and get 3 additional days free) and 50% off collection and return fees.
They are generally on sale around September/October for leases the following year.
What we paid
As there will only be my husband and myself travelling together this time, we chose a small 4 door car, a Peugeot 208 1.6L manual diesel with a GPS.
We were able to take advantage of an early bird discount as we booked before 30 November last year, as well as a loyalty discount (three days free) for being past clients of Peugeot Open Europe (the Peugeot leasing program).
Our 39 day lease cost $1918.82 in total - less than $50 a day. (UPDATE: As at 30 September 2017, the cost to lease the equivalent veicle for 39 days with collection and drop off in France - without early bird or loyalty discounts - is $2075 which equates to just $53 per day. Excellent value.)
No pick up or drop off fees apply to our lease as we are collecting and returning the vehicle at French depots, however if you are picking up or dropping off your car at depots outside of France, fees will apply (usually around $200 - $300).
Even though we are starting this trip in Barcelona and spending a few days there, we opted to book a train from Barcelona to Perpignan* (just inside the French border) where we'll pick up the car (at Perpignan airport).
We'll be returning the car to Strasbourg* airport, also in France, and then catching a train to Paris.
*Update – September 2017: Perpignan and Strasbourg are no longer depots for the Peugeot tax-free leasing program. (Strasbourg is a depot for the Renault tax-free leasing program.)
On previous trips we have collected and returned vehicles to the Peugeot depots at Frankfurt, Zurich and Paris Orly airports.
Which manufacturers offer the tax-free leasing program?
Citroen and Renault also offer the same program (available through globalCARS in Sydney) but we chose Peugeot as we have used them a few times before. You'll recognise the cars on your travels around Europe by their red number plates.
As I said above, the whole contract signing thing can seem a bit scary, but the program is definitely legitimate and has been operating for many years.
As the lease program is only available to non-EU citizens, it's a way that French manufacturers can save tax on their brand new vehicles. Our first Peugeot lease was in 2000, followed by 2005 and 2008, and again this year, 2014. (Update: We again leased a car in 2015, collecting it in Montpellier and returning it to Munich.)
If you've now decided that leasing a car for your self-driving holiday in Europe is the way to go, below is a quick summary of the booking and payment procedure.
Get a free quote
Booking your tax-free vehicle online is simple. Visit this link and choose your preferred vehicle size, whether you want a diesel or petrol model, manual or automatic transmission, pick up and drop off locations and dates, and add any optional extras like GPS or child seats.
The website will then show you the price of your lease (excluding collection and drop off fees).
If you are booking prior to 30 November but not collecting your vehicle until the following year, you may qualify for an early bird discount which can include up to seven free days and 50% off delivery and return fees.
Prices on the website will be automatically calculated to include any early bird discounts that apply.
Reserve your vehicle and make your payment
Once you are happy with the quote you have received online, it's time to reserve your preferred vehicle and make your payment. Full payment is required at the time of booking, $500 of which is non-refundable should you cancel the booking.
A credit card fee of 1.2% applies to payments made via Visa or Mastercard and a 1.8% applies to American Express payments.
When your booking and payment has been confirmed, you will be emailed the lease contract to sign and return.
Pay any additional charges applicable to your booking
After confirmation of your booking is received, should any additional charges apply for collection or drop off fees, child seats, etc., you will receive notification of the extra charges by email before your credit card is charged.
Receive your documentation
About six weeks prior to your vehicle collection, you'll be emailed your leasing documents. These will include a voucher to present on collection of your car as well as instructions and maps showing the location of the depots where you will collect and return your vehicle
Vehicle collections and returns MUST BE confirmed four business days prior. If you are collecting your car immediately on arrival at the airport and have advised the booking agent of your flight details, re-confirmation is not necessary.
If, however, you are making your own way to the collection depot it is essential that you make an appointment with the depot so that your vehicle is ready for you on arrival.
Not all depots are manned all day so if you haven’t reconfirmed your collection time, you may arrive to find the depot closed and no-one in attendance.
Contact details (telephone and email) for re-confirmation are provided with your final documentation. Drop offs should also be re-confirmed four business days prior.
Collecting your vehicle
When you arrive at the depot at the designated time, a representative will run through the contract with you, ask to see your valid driver’s licence (an International Driving Permit is recommended) and run through the intricacies of the vehicle with you - where the indicators are, how to select reverse gear (not all cars are the same and we got caught with this one, once!!), where to find the bonnet release, etc. etc.
You will also be reminded to make an appointment for your vehicle drop off. Staff at all the depots we have used previously have spoken very good English.
(Update: On the day we were to collect our Peugeot in 2014, the French trains were on strike and our arrival into Perpignan was going to be delayed by eight hours. We phoned the Peugeot Open Europe agent and advised her and she agreed to meet us later in the day.)
Unlike regular car hire, your lease vehicle will only be provided with about 10 to 15 litres of fuel, usually enough to get you out of the city and on your way. You are not required to return the vehicle with a full tank and there are no charges if you don’t.
So, with a brand new vehicle in your hands, it's time to hit the roads of Europe and enjoy the freedom to go where you please, when you please.
Returning your vehicle
Just like you need to make an appointment to collect your vehicle, you also need to do the same four days prior to returning it. Contact details will be provided with your documentation.
You then hand over the keys and the registration papers to the Peugeot Open Europe agent and end your 'ownership' of the vehicle.
Update: Unlike most other drop-off depots we've used in the past, when we contacted the Strasbourg depot (who use Europcar agents on their behalf), we were told that the depot would only be open from 4pm to 9pm on the day we were to return the car.
As this didn't suit us (we were catching a train at 2.30pm), we were advised to leave the vehicle in the Europcar car park (with registration documents inside) and leave the keys in the key drop box at the Europcar counter.
We did this, however to ensure we were 'covered' against anything happening to the car after we left it, we photographed every panel of the car as well as the registration papers in the glove compartment and we also took a photo of my husband dropping the keys into the key drop box (with his watch in the background to confirm the time!).
About a week later we received a questionnaire from Peugeot Open Europe asking about our experience with the leasing program, so presumably everything was in order with our vehicle return!
I hope you have found the above step by step guide to the tax-free vehicle leasing program in Europe helpful. Ready to book your vehicle? Click on the banner below to reserve your vehicle.
*The above information applies to Peugeot Open Europe leases. Renault and Citroen leases may have different procedures and conditions. All prices are in Australian dollars.
This article was originally published in 2014 but has been updated with current information.
PIN FOR LATER