Sale-and-leaseback explained

When is it interesting?

During growth, a large order, or a temporary liquidity need. Weigh the total costs against other financing options. More about equipment lease.

Which assets are eligible?

Sale-and-leaseback is applicable to a wide range of business assets, provided they are value-retaining and marketable. This includes production machinery, inventory, internal transport equipment such as forklifts, and ICT equipment. The nature of the asset and its lifespan play a role in the lessor's assessment. After all, the object must provide sufficient security as collateral for the financing.

Crucially, the assets must still be operational and of sufficient value. Worn-out or significantly outdated assets will rarely qualify for sale-and-leaseback. The lessor assesses the residual value and marketability at the end of the lease period. This process often begins with an appraisal to determine the current market value of the assets.

What are the financial and tax considerations?

Financially, sale-and-leaseback offers a direct injection of liquidity. The sale price of the assets is freed up on the balance sheet and can be used for investments, repayments, or working capital. Simultaneously, monthly lease obligations arise. It is essential to weigh the effective costs of this financing method against alternatives, such as a bank loan, and to consider its impact on cash flow.

From a tax perspective, the business becomes the economic owner, and the lessor becomes the legal owner. This means that the assets disappear from the company's balance sheet, thereby improving solvency. The lease instalments are fully tax-deductible as business expenses. It is advisable to discuss the specific tax implications with an accountant, as these can vary depending on the precise structure and the company's tax situation.

• Direct liquidity improvement.
• Improves balance sheet ratios (solvency).
• Lease instalments are tax-deductible.
• Specialised advice is crucial.

Frequently asked questions