Operating lease has the characteristics of a business lease because it is the use of the leased asset without the intention of acquiring ownership with the option to replace it by a new asset
upon expiration of the agreement.
- The leased asset is accounted for and depreciated in the business records of the leasing company
- The leasing fee is included in the operating costs of the lessee and VAT on installment/lease payments can be tax-deductible (depending on specific parameters)
- The balance sheet of the lessee is not additionally encumbered, because it does not record the long-term debt