Leasing

1. Leasing is a matter that is very well known, but on the other hand not regulated by our law (with the exception of an international accounting regulation: IAS from 1.1.1997).

As a result, it allows great flexibility in the elaborations, and that the framework of the rules can be found in case law. There are, however, two forms: financial lease and operational lease.

2. This financial lease occurs when the advancing party (the lessor) bears no obligation other than the initial payment for the purchase.

Example  I want to buy a car through leasing; in reality, it will be the other party who will buy the car (and become the owner of it), but the vehicle will be made available to you. The supplier can then be a third party, so that we are usually dealing with a 3 party agreement.

Upon delivery, you (as the lessee) must check that there are no defects, and thus react as if you were buying it yourself (a PV of acceptance will be drawn up, and once you have signed it, the visible defects are covered). If something is broken you must take care of the repair. You must maintain the vehicle properly, and if this is not done and this is determined, the lease may be terminated to your disadvantage. So once the lease has been signed, the official purchaser has nothing to worry about other than seeing to it that you make periodic payments and, if necessary, properly maintained the vehicle.

And you must be able to act as if you are the buyer owner. So if there are hidden defects, you must make this known, and if there is no response, make this known by registered letter. If nothing is done yet, you must bring the case to court in good time (otherwise you will lose your rights).

And at the end of that period you will then be able to acquire ownership and this after payment of a residual value.

Because the rules are free, one must of course be all the more aware of the scope of the agreement that one is signing. After all, you should keep in mind that if you do not pay for a certain period, it is not impossible that the vehicle will be taken from you and you will have to pay further. What exactly is stated in that agreement is therefore fundamental. It falls under the regulation of the damage clauses, and the amount of the compensation must correspond to the damage that could be estimated when entering into the agreement.

What is exaggerated can therefore be reduced. For example, it will be possible to reduce an arrangement whereby it is provided that you must hand over the car and are also obliged to pay the rest of the lease fees. If the same arrangement is provided minus the proceeds from the sale of the vehicle, it is allowed.

The concept of a financial lease, therefore, means that the lessor must be concerned primarily with receiving these periodic payments. However, all the rights as the lessor's buyer or owner must have been transferred to you as the lessee.

3. An operating lease is any form of lease that is different.

However strict rules may be, this legal figure retains its attractive character for many people. Anyone who has no capital, but has a monthly income, will therefore be able to purchase goods for both his profession and private matters. Debtors will also want to buy more easily through leasing, as their creditors cannot seize these goods (after all, they are owned by the lessor), and will sell these goods quickly when taken over at the end of the period.

Or persons who have assets but no liquidity and need it will in some cases want to switch to sale and leaseback.

By selling one obtains this liquidity, and one can continue to use the goods subject to monthly payment of course.

Leasing can also relate to real estate, so-called real estate leasing.

The rules have recently become somewhat stricter regarding the identity of the lessor, also because it contains interesting tax aspects. After all, leasing as a service is subject to VAT, so the lessor as a person liable for VAT will be able to deduct the VAT from the costs incurred.

The lessee will also be bound by the term that has been agreed on the contract, which therefore provides a stable financial security, without further concern about the condition of the building and its maintenance costs (compare commercial rent where the lessor is always held to the gross repairs).

You can request all possible information, contracts or assistance from our office.

(text revised to 15.4.2017)