Finance lease

According to the Law of Ukraine, leasing is a type of civil law relations that emerge from the leasing agreement, by which the Lessor is obliged to acquire title to property from the Supplier with corresponding specification and assigns it to the Lessee for a determined period of not less than one year for a fixed fee.

Thus finance lease appears to be long-term rent of a vehicle with accounting and tax depreciation on the balance sheet of the Lessee.

By finance lease:

• The vehicle is on the balance sheet of the Lessee which enables to reduce the tax profit by depreciation.
• By delivery of the vehicle the client receives tax invoice for the aggregate cost of the vehicle basically doing only advance payment.
• Commission and service expanses apply to Total Costs.
• The lease term ranges from one to five years.
• The client is entitled to top-priority right to buy out the leasing object.
• Part of leasing payments is not object to VAT.

Accounting in finance lease
Obtaining the vehicle in finance lease the Lessee increases the relevant item of fixes assets and adds amortization (10% of the balance value quarterly) which reduces the profit tax.
The Lessee increases the Total Costs by part of leasing payments which equals sum of interest and commission added to the cost of the lease-object. Service fee applies to Total costs.

Financial liabilities by the Contract reflect on the client’s balance sheet.

Choosing finance lease you choose a profitable scheme of financing car purchase with full range of services for your car fleet.