Sale-and-lease-back is in principle a type of finance lease. Classic finance lease follows this process: Deutsche Leasing, the lessor, orders the desired object such as a machine, a vehicle or IT equipment directly from the supplier. It is delivered to the customer, the lessee, and the customer receives rights of use for the object. In return, he pays - depending on the contract - a continuous, predictable leasing instalment. In the sale-and-lease-back procedure, the company buys the desired investment object directly from the manufacturer or supplier, sells it to the leasing company and leases it back from the latter. In this way, it can continue to use it for a fee. A company can also sell used investment objects or real estate to the leasing company and lease it back. The customer is thus both supplier and lessee in one for Deutsche Leasing. According to the Federal Association of German Leasing Companies, the share of sale-and-lease-back in new leasing business has been around 5 percent for years.
For some companies this subtype of finance lease is particularly suitable. In two cases, the sale-and-lease-back advantages are evident:
Just as with classic finance leasing, after the sale the leased object is no longer capitalised in the balance sheet of the customer, the lessee, but of the leasing company. Depending on the structure of the agreement, the lessor is both the civil law and economic owner of the capital asset if he complies with the parameters described in the leasing decrees for this purpose, which essentially concern the term and the regulations at the end of a leasing agreement. The leased asset is therefore not recognised in the balance sheet of the lessee.
In addition, the customer can deduct the leasing instalments and special leasing payments in full as operating expenses for tax purposes. A prerequisite for this is always that the company prepares its accounts in accordance with the German Commercial Code (HGB) and not in accordance with the International Financial Reporting Standard IFRS. In the latter case there are some special regulations to be observed.