International Usage
The practice of leasing is well established in most countries of the world.
However the benefits (in particular the tax benefits) to the lessee and lessor will vary widely depending on national accounting standards and tax regulations. These largely divide into countries observing:
- Legal form: the lessor's legal ownership of the property
- Substance: the leasee's legal right to use the property
National accounting standards vary in the tests that decide if the lease is a:
- Capital or finance lease, which is considered a financing transaction - as the lessor has less of the risks of ownership, such as the value of the equipment in future years.
- Operating lease, whose term is short compared to the useful life of the asset, where the lessee does not have to show the lease on their balance sheet.
Read more about this topic: Leasing
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