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Leasing ABC's

ABC leasing is a compendium of knowledge, thanks to which you will learn all the necessary definitions related to leasing and long-term rental of vehicles and you will learn how the legal and tax provisions related to them operate.

Leasing

Definition of lease

Lease is a form of financing combining features of both lease/rent and credit.

Lease agreement is an agreement concluded for a specified period of time under which the Financing Party (Lessor) purchases a specific object of lease from a specified Supplier and subsequently gives such an object to the User (Lessee) for use. In return, the User is obligated to pay the Financing Party an appropriate consideration in the form of lease installments.

Parties to the lease transaction:

  • User (Lessee): a natural or legal person conducting business activity which concluded a lease agreement with a lease company, under which it uses the object of lease;
  • Financing Party (Lessor): a lease company;
  • Supplier of the object of lease: a business entity (a legal or natural person) selling and providing the object of lease; in the case of the so-called leaseback the role of the Supplier is fulfilled by the User.
Legal basis

Lease is an agreement defined in the Polish law, governed by the following legal acts:

  • Civil Code (Title 7¹) (title added on 26th June 2000; Polish Journal of Laws of 2000 No 74, item 857),
  • Corporate Income Tax Act of 15th February 1992 (consolidated text, Polish Journal of Laws of 2000 No. 54, item 654, as amended – Chapter 4a),
  • VAT Act (Polish Journal of Laws of 2004 No. 54, item 535, as amended),
  • Accounting Act (Article 3 sec. 4) (Polish Journal of Laws of 1994 No. 121, item 591, as amended).

Long-term rental

When deciding to take advantage of a long-term rental, you may choose between three services: Full-Service Leasing, Lease & Service and Fleet Management. Below you will find information on what the individual solutions consist in.

Full Service Leasing (FSL)

Main terms and conditions:

  • Financing the Client’s fleet under an operating lease, rental or lease agreement.
  • Risk related to the residual (final) value lies with the Financing Party.
  • Term of the agreement: at least 24 months.
  • The agreement must cover at least three non-financial services (including always mechanical service).
Leasing & Service (LS)

Main terms and conditions:

  • Financing the Client’s fleet under an operating lease, rental, lease or finance lease agreement.
  • Risk related to the residual (final) value lies with the User.
  • Term of the agreement: at least 24 months.
  • The agreement must cover at least two non-financial services, without the obligation to take advantage of the mechanical service.
Fleet Management (FM)

Main terms and conditions:

  • The company managing the Client’s fleet does not finance it. The fleet management services pertains to vehicles that are the property of the Client.
  • A fleet management agreement is concluded for at least 6 months.
  • Any number of non-financial services.
  • Non-financial services in long-term rental

Most Clients of companies offering fleet services use vehicles taking advantage of a comprehensive service package. It covers, apart from financing, also service and fleet management in all its aspects: operational, administrative, legal and technical. The main non-financial services are:

  • insurance,
  • loss settlement,
  • mechanical service,
  • tyre exchange and service,
  • assistance and replacement cars,
  • fuel card servicing,
  • door-to-door,
  • reporting.

Other leasing services

Apart from the long-term rental you may take advantage of other services addressed at companies that would like to expand their fleet.

Financing: Lease

Main terms and conditions:

  • The lease company finances vehicles under an operating lease, rental or lease agreement.
  • The risk associated with the residual (final) value lies with the User or the Financing Party (depending on the agreement).
  • Term of the agreement: at least 24 months.
  • Agreement pertains to financing only: there are either no non-financial services or just one such service.
Short-Term Rental (STR)

Main terms and conditions:

  • The rental (STR) company finances vehicles in any form.
  • Term of the agreement: maximally 24 months.
  • Any scope of financial services and solutions related to the risk associated with the residual (final) value.