Return leasing

Return leasing, unlike a classical financial lease, involves not three parties in the transaction (the seller, the lessor and the lessee), but two. This is a kind of leasing, in which the seller of his subject and the lessee are one person. This is an effective tool for replenishing working capital or refinancing capital investments. It is more profitable than applying for a loan to a bank or acquiring new assets at its own expense .

What is the mechanism of such operations? How does return leasing work? The enterprise sells its own property to the leasing company and immediately becomes a lessee (leases it). That is, the client receives 100% of the value of the property, and at the same time it remains in its use ("returns"). In this way, it is possible to obtain working capital without attracting additional sources of financing.

There are simultaneously two contracts (purchase and sale and leasing). Such a transaction resembles the issuance of a loan on bail, only the costs for it will be lower than the interest paid to the bank. In addition, re-lease allows the company to minimize the cost of paying taxes, since the lease payments are fully attributed to the cost of production. Savings on the tax is possible and due to the application of accelerated depreciation, which is allowed in this case. Upon termination of the contract, the property at residual value (equal to almost zero) passes to the balance of this enterprise. Therefore, using reverse lease, it is possible to reduce the tax on such property to symbolic sizes.

The property of the organization (enterprise) in this case does not actually change the location and can still be used in the production process.

However, there are certain nuances of concluding such deals. Therefore, to assess the risks, the potential lessee must calculate the tax consequences before the conclusion of the contract so that the transaction is not unprofitable. This is especially important if it is necessary to take equipment, machinery or cars into leasing, which are reflected on the balance of the recipient at a reduced price, since taxes will be calculated at actual prices.

The tax authorities strictly follow the transactions on return leasing (suspecting the possibility of fraud with payments), paying close attention to those enterprises that have problems with the documentation and tax accounting. Return leasing is used to improve the balance sheet performance by selling property not by residual, but by market value, which is usually significantly higher. But the law on leasing does not prohibit the lessor from buying property from its owner. Therefore, the lease lease agreement fully complies with the requirements of the law.

Nevertheless, it is not advisable to conclude such transactions too young enterprises, which have not yet matured economically. Leasing is justified during periods of serious modernization of stable enterprises, which currently do not have enough funds of their own or who do not have the time (opportunity) to find more suitable financing options.