LEASING. THE INNOVATIVE FORM OF FINANCING.
Leasing in Austria is based on section 21 (1) of the Austrian Tax Code, the Income Tax Guidelines dating from 1984 and the respective tax commentary.
The term of the lease shall not exceed 90% of the normal operating service life. The prepayment shall not exceed 30% of the purchase price; a further 20% is allowed as an interest-free deposit. Purchase options are not allowed if the option value is less than 50% of the straight-line residual value. Leasing may be used in Austria to optimise tax liability (leasing effect, sale and lease back etc.)
Full payout lease: The primary lease term shall be more than 40% but no more than 90% of the economic useful life. At the end of the lease, the lessee can either extend it or buy the assets.
Non-full payout lease (with residual value assumption): Over the non-cancellable lease term the financing costs are only partially covered by the lease instalments, since a residual value is calculated at the time the lease is signed. The residual value is determined by the residual book value of the assets (calculated using the straight-line depreciation method) and their market value.
Hire purchase: A leasing company purchases capital assets and sells them to its customer based on reservation of ownership. Once all instalments have been paid, ownership is automatically transferred to the customer at the end of the agreement.
Payment of variable interest rates on lease instalments will normally be agreed (exception: reservation of title for contracts of purchase). Leases shall be recorded as rental agreements subject to a fee of 1% (loan processing fees in Austria vary between 0.8% and 1.5%).