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Leasing offers a flexible and cost-effective solution for companies looking to invest without burdening their liquidity. But what exactly is leasing, and how does it differ from a traditional loan? Find out here.
Leasing is a way of financing business assets. Here, the lessor (leasing company) buys a tangible asset - e.g. a car, computer, machine or building - and makes it available to the lessee (customer). For this service, the lessee pays a periodic rent (usually monthly or quarterly) and often has a purchase option at the end of the lease.
Febelfin does not offer leasing contracts. You can contact the leasing companies for this.
Leasing offers several advantages
In addition, a specific Charter was drafted to ensure that circular projects by entrepreneurs receive better and faster support from the financial sector.
Real estate leasing is a way of investing in buildings. In this, the leasing company purchases an existing or new building, possibly together with land rights, at the customer's request. The customer then pays a periodic rental fee to use the building. Only buildings for business purposes are eligible, such as offices, shops and factories.
Who is it for?
Real estate leasing is especially suitable for larger companies that need buildings for their operations. Governments, hospitals and other public and social institutions can also use it. Private individuals cannot use real estate leasing. The duration of a real estate lease is usually 15 years.
What are the benefits of real estate leasing?
Higher financing rate: besides the cost of incorporation or purchase, architectural fees and connection costs can also be financed.
Fewer additional guarantees needed, leading to lower mortgage costs.
Greater flexibility: real estate leases can be accounted for either on-balance sheet or off-balance sheet. In the latter case, rentals are recorded as expenses, which does not aggravate balance sheet ratios.
This is a form of lending that allows financing all business assets needed to carry out a company's activity (IT equipment, construction machinery, production lines, etc.). The leasing company buys the goods and leases them to the customer, who pays rent periodically. At the end of the contract, the customer can buy the goods.
Who is it for?
Equipment leasing is suitable for businesses, the self-employed and the liberal professions. It is especially convenient for start-ups because the goods remain the property of the leasing company, so fewer guarantees are needed.
What are the benefits?
Full financing: the leasing company pays the full purchase price, including VAT, transport and installation costs.
Fewer warranties: The leasing company retains ownership of the goods, avoiding burdersome warranty procedures.
VAT advantage: The customer does not have to pay the VAT in one go, but spread over the term of the contract. VAT on the rent is recoverable.
Simple and predictable: The customer receives one invoice periodically with fixed amounts, which makes budgeting easier.
Flexibility: The customer chooses the supplier and the terms. At the end of the contract, the customer can buy the goods.
This is a way of leasing cars and other vehicles. The leasing company buys the vehicle and rents it to the customer, who pays rent periodically. At the end of the contract, the customer can buy the vehicle. This can include new or used cars, vans, trucks, motorbikes and even buses.
Who is it for?
Vehicle leasing is only possible in Belgium for professional users, such as companies, the self-employed and the liberal professions. The duration of a leasing contract is usually 60 months, but can also be shorter or longer.
What are the benefits?
Full financing: the leasing company pays the full purchase price, including VAT. The customer can make an own contribution through an increased initial rental fee.
Freedom of choice: The customer chooses the vehicle, the supplier and the terms and conditions.
VAT advantage: The customer pays the VAT over the term of the contract, which avoids a financial burden at the time of purchase. VAT on the rental is recoverable.
No business guarantees: The customer usually does not need to provide additional guarantees, which allows for other investments.
Flexible accounting: Leasing can be accounted for off-balance sheet, which does not aggravate balance sheet ratios.
In finance leasing, you rent an asset (such as a machine or vehicle) and include it in your company's balance sheet. You pay periodic rent and can buy the asset at the end of the contract. It remains the property of the leasing company until you exercise the purchase option. You can buy the leased asset at the end of the contract for up to 15% of the investment amount.
You want to book it properly on your balance sheet and depreciate it properly.
You want to enjoy any investment subsidies.
You have the option to continue using and purchasing the asset at the end of the lease.
Operational leasing is more like renting. You use the asset for a certain period, but it remains on the balance sheet of the leasing company. Maintenance and insurance are often included. At the end of the contract, you return the asset or extend the lease. Sometimes you can also buy the asset (usually for more than 15% of the investment amount), but this is not always the case.
You don't want the leased asset to impact your balance sheet.
You want the rental charges to appear as operating expenses in your profit and loss account.
You consider the possibility of taking ownership at the end of the lease less important.
In a "sale and lease back", you sell a property (such as a building) to someone else and immediately lease it back. This means you continue to use the property, but you are no longer the owner.
Example: A company wants to invest in a new building. It sells existing machinery to a leasing company and uses the money for the investment. At the same time, the company leases the machines back. This spreads the risks for the leasing company.
keep own funds available
release credit lines at bank
restructure financial debt
In vendor leasing, suppliers of investment goods (cars, forklifts, copiers...) offer rental or leasing contracts as part of their sales strategy. This can include both financial and operational leasing. Often, additional services such as insurance and maintenance are also offered, sometimes integrated into the lease contract.
For example: Companies rarely buy copiers anymore. Instead, they rent them through all-in contracts, which lowers the cost per copy. These contracts include financing, insurance and maintenance. Although the supplier makes the contract, a leasing company often provides the financing and sometimes takes over the risk of default.
expand your range of services
boost your sales
generate additional income
you have one interlocutor for both delivery and financing
you get a total solution where financing and additional services are bundled in one contract
funding channels are diversified
Leasing was introduced in Belgium in the late 1950s, with the establishment of the first leasing company in 1961. Royal Decree No 55 of 10 November 1967, which is still in force, gave leasing the legal name 'financing lease' and established criteria for leasing operations. The initial approval requirements for leasing companies were outlined in 1968 and updated in 2012. Both movable and immovable leasing require approval. Since then, several legislative texts and decrees have been issued that define the tax-legal rules.
Royal Decree No 55 of 10 November 1967 regulating the legal status of companies specialising in finance leasing.
Ministerial Decree of 20 September 2012 defining the conditions for recognition of companies specialising in finance leasing. Recognition can be requested from the FPS Economy.
For figures, consult the activity report.
For statistics on leasing in Europe, visit the Leaseurope website.