Finanzservice

Leasing

• Fixed assets of the lessor
• does not form part of the lessee’s fixed assets
• Keeps the balance sheet total low and improves the equity ratio
• The lessor is the owner in the legal sense
• The lessor is the owner in economic terms
• VAT is due on each agreed payment
• VAT is deductible as input tax
• Vehicle can be taken over at the end of the contract period
• Contract term depends on depreciation period
• Contract term between 40 and 90% of the normal useful life of the vehicle
• Tax deferral effect possible through declining balance instalment payments
• No special depreciation possible
• Simple accounting – monthly leasing instalment is directly deductible as an expense

Hire purchase

• Fixed assets of the hire-purchaser
• Accounting treatment in the fixed assets of the hire-purchaser.
• Increases fixed assets and thereby increases the balance sheet total
• Equity ratio is thereby reduced
• Owner in the legal sense is the hire-purchaser
• Retention of title in favour of the hire-purchaser (not PEKI)
• VAT is payable on the total of all payments at the beginning of the contract
• VAT deductible as input tax
• automatic transfer to unrestricted ownership at the end of the contract
• Contract period freely selectable (up to 100% of the normal useful life)
• Use of special depreciation possible, thus tax deferral effect
• Monthly hire-purchase instalment consisting of repayment and interest
• Accrual of interest according to repayment schedule