Skip to main content
ABC leasingu

Operating lease in accounting

Pursuant to the Accounting Act, an operating lease agreement is an agreement under which the User:

  • does not classify the object of lease as its balance sheet asset;
  • does not make depreciation write-offs;
  • the entire lease instalment is charged towards current costs;

and the lease agreement does not meet any of the following conditions:

  • it transfers the ownership title to the object of the lease agreement to the User upon the lapse of its term;
  • it contains the right to purchase the object of lease by the User upon the end of the period for which it was concluded, for a price lower than the market value as at the purchase day; here the purchase of the fixed asset by the User is meant;
  • the period for which it was concluded is mainly equivalent to the anticipated useful life of the fixed asset or property right, with the reservation that it may not be shorter than ¾ of such a period; the property right to the fixed asset may (but does not have to) be transferred to the User upon the lapse of the term of the agreement;
  • the sum of fees, reduced by the discount, determined on the day of concluding the agreement and payable during the term of the agreement, exceeds 90% of the market value of the object of lease as at the day of concluding the agreement: the sum of fees taken into consideration while verifying this condition includes the final value of the object of the agreement that the User undertakes to pay on account of its purchase; however, fees payable to the User for additional performances, taxes and contributions towards insurance of the fixed asset are not taken into account, if the User covers them independently of the fees for usage;
  • it contains a commitment of the Financing Party to conclude another agreement with the User on transfer of the same object for payable use or to extend the current agreement on terms that are more advantageous from the terms provided for in the current agreement;
  • it provides for the possibility of its termination, however with the reservation that all costs and losses incurred by the Financing Party on this account are borne by the User;
  • the object of lease has been adjusted to the individual needs of the User; meeting this condition means that it is very likely that the fixed asset will be purchased by the User, even if this has not been expressly provided for in the agreement.
  • The remaining transactions that meet any of the above conditions are—pursuant to the Accounting Act—finance lease transactions and the object of lease is disclosed in the balance sheet of the User.

 

  Operating (Tax) Lease Off-Balance Sheet Operating Lease
Comparison of individual types of lease transactions
Nature rental rental
(Legal) ownership of the object of lease Financing Party Financing Party
Right to make depreciation write-offs Financing Party Financing Party
Residual (final) value not lower than the hypothetical value market value
Term of agreement Specified > 40% of the normative period of depreciation (movables) or > 10 years (real estate) may not be shorter than ¾ of the useful life
Deductible
costs
total lease fee (principal + interest) total lease fee (principal + interest)
Total fees (VAT excluded) equal to at least the initial value of the object of lease total fees reduced by the discount on the day of concluding the agreement < 90% of the market value of the object of lease
VAT

VAT is charged and paid along with individual lease payments (according to the schedule)

Tax rate: 22%

VAT is charged and paid along with individual lease payments (according to the schedule)

Tax rate: 22%

Party disclosing in the balance sheet User Financing Party