Leasing in Poland is an increasingly popular form of financing equipment and facilities for both companies and individuals. In order to better understand this method of financing, it is worth learning about its main types – operating and finance leases. They differ in the way they are accounted for, the impact on taxes and the depreciation of the asset, so it is worth learning about their characteristics in order to choose the best option for our needs. This article was written in cooperation with bagrupp.com, a Warsaw-based accounting firm specialising in financial and accounting consulting in Poland.
What are the main types of leasing?
Leasing is a popular way for companies and individuals to finance various types of equipment and facilities. In order to gain a full understanding of the subject, it is useful to familiarise ourselves with the main types of leasing in order to choose the best option for our needs.
Leasing allows various equipment to be financed by the lessor (leasing company) to the lessee (customer) for a fee. There are two main types of leasing: operating and finance leases.
What are the differences between operating and finance leases in Poland?
Both operating and finance leases allow the purchase of a vehicle or other good, but differ in the way they are accounted for. In areas such as taxes, depreciation or buying the vehicle back from the lease, the accounting is done differently, which also results in certain benefits for the company.
Operating leases are straightforward and offer tax advantages. In this form of leasing, the initial rent paid and the lease instalments are tax deductible. Unfortunately, operating leasing does not allow depreciation of the asset, as the vehicle is not entered in the fixed asset register. This is the simplest form of leasing, making it a good choice for those who do their own bookkeeping without the assistance of accountants.
A finance lease allows you to depreciate a fixed asset, such as a car, and recognise the interest portion as an expense. Unlike operating leases, the initial rent is not included as a deductible expense. VAT is charged on the entire transaction upfront, which can be problematic for some companies. This type of lease is a good choice when the lease term is short.
Which leasing option is the most popular in Poland?
Operating leasing is the most common choice for businesses in Poland. It offers the opportunity to use the car for a longer period and benefit from favourable tax rules when leasing new vehicles. Accounting for operating leases is simpler than for finance leases. It is worth comparing offers from different lessors and choosing the best option in terms of costs and leasing terms.
