The reasons for national and international leasing

There are many tax-related and non-fiscal reasons for leasing. The main function of a leasing transaction is to provide the lessee with the use of an object, without the need that it pays the cost of its acquisition upfront. Simultaneously, it gives the lessor a steady return on its investment. Additionally, the lessor retains the ownership of the leased object. Accordingly, the legal position of the lessor is safeguarded. For that reason it is faced with less economic unpredictability, which, in turn, will lead to lower interest rates. In many states with emerging capital markets leasing is the only source of financing the acquisition or use of capital goods on reasonable conditions. Particularly, leasing gives major cash flow advantages to new companies that have not been able to built-up a stable and reliable credit history. In addition, leasing provides smaller companies with the opportunity to borrow money, without the requirement of collateral. In general, leasing expenses are lower than the costs of the traditional banking devices. Furthermore, leasing can generate funds up to 100% of the financing needs. The total value of world leasing industry increased more than ten-times over the last twenty-five years. The leasing market expanded most in North America, Europe and Asia.

B. Patrick Honnebier, LL.M.

Expert International Leasing Law

Associate Professor of Law

University of Utrecht

Department of Commercial, Financial and Corporate Law

The Netherlands

Words you may need:

to enhance – збільшувати, посилювати

fleets – парк (автомобілів і под.)

to entail – викликати (що-небудь)

in (with) regard to – відносно

drafting – складання (законопроекту, документу)

acquisition upfront – придбання авансом, наперед

steady return – стійкий прибуток

unpredictability – непередбачуваність, неможливість прогнозування

requirement – вимога, необхідна умова

collateral – додаткове забезпечення

furthermore – до того ж; крім того; більш того