Leasing

What is it?

Contract in which the lessor (leasing company) loans to the lessee (Client) against payment of a rent, the temporary use of an asset, fixed or real estate, acquired or constructed according to the instructions of the client and which he can acquire at the end of the contract for a pre-determined price (residual value).

Involved parties:

  • Lessor
  • Lessee
  • Supplier

Targets and advantages

Targets:

  • Companies or comparable entities
  • Self-Employed Businessmen
  • Liberal Professionals
  • Public Administration
  • Consumers

Advantages:

As clients:

Fixed Assets (Equipments)

  • You select the equipment you want and its supplier
  • Possibility to negotiate discounts on the equipment’s price, since it is a prompt payment
  • Possibility to finance the total value of the equipment
  • Contractual conditions are adaptable to the liquidity capacity of the company
  • Receive a quick answer and the operational procedures are simple
  • A fit alternative (medium/long term) for the financing of investments while allowing available resources to be directed towards other ends
  • Diluted payment of VAT, according to the rents’ scheme
  • Not subject to Stamp Duty tax (Imposto de Selo)
  • At the end of the contract, the client is free to choose to acquire the asset for the pre-defined value, usually, 2% to 6% of its cost.

Real Estate

  • You chose the real estate and its supplier
  • Possibility to negotiate discounts on the price of the real estate, since it is a prompt payment
  • Possibility to finance the entire value of the real estate, including Municipal Transmission Tax and expenses with the Notary and Register
  • Contractual conditions are adaptable to the client’s treasury
  • Fast reply and simple operational treatment
  • Adequate alternative (medium/long term) to finance investments while allowing short-term financial support to be made available for other purposes
  • Contract rents are subject to the VAT rate of acquisition of the asset
  • Not subject to the Stamp Duty
  • At the end of the contract you are free to opt to acquire the asset for a pre-agreed value, usually, between 2 and 10% of the acquisition price.

As Suppliers:

  • It facilitates sales by offering clients a form of financing which is also an excellent selling argument
  • All business are in PROMPT PAYMENT
  • Exemption from credit risk

What it finances

Leasing can finance all types of assets:

Fixed Assets (Equipments)

  • Light and heavy vehicles, both passenger and commercial
  • Industrial Machinery
  • IT equipment
  • Medical equipment
  • Construction industry equipment
  • Others

Real Estate

  • Stores and commercial establishments
  • Offices
  • Clinics
  • Warehouses
  • Industrial installations
  • Housing
  • Others

Leasing description

Financing Timings:

Fixed Assets Leasing (Equipments)
The parties are free to negotiate with the legal imposition that the contract must not go over the term which corresponds to the presumable length of economic utilization of the asset.
The most common: 24 to 48 months

Real Estate Leasing
The parties are free to negotiate with the legal imposition of a maximum term of 30 years. In the case of omission in the contract, legislation stipulates a term of 7 years.
The most common: 7 to 10 years

Financing amounts:

Fixed Assets Leasing (Equipments)
Up to 100% of the investment

Real Estate Leasing
Up to 100% of the investment (can include: Municipal Transmission Tax, notary and registration deeds)

Residual values:

This question only relates to Financial Leasing which has no legal imposition regarding this issue. The most common:
Fixed assets: 2 to 6%
Real estate: 10%

Rents’ scheme:

System: Early payment or payable in arrears
Terms: Constant or variable
Frequency: Monthly, quarterly, biannually or annually
Interest rates: Fixed or Indexed
The most common: Constant, monthly or quarterly early payment rents.

Tax:

Fixed Assets Financial Leasing (Equipments)
CiT: Interest may be deducted according to legislation
PiT: Interest may be deducted according to legislation
VAT: Subject to VAT at the rate of acquisition of the asset (recoverable in some applicable cases)
Stamp Duty (Imposto de Selo): Not applicable

Real Estate Leasing
CiT: Interest may be deducted according to legislation
PiT: Interest may be deducted according to legislation
VAT: Exempt, allowing for the waiver of that exemption according to the law
Stamp Duty (Imposto de Selo): Not applicable
Municipal Transaction Tax (IMT): normal regime while still being able to benefit from the applicable reductions set in the law.
Property Tax (IMI): Normal regime

Legislation

Decree-Law n.º 298/92, 31st of December - General Regime of Credit Institutions and Financial Societies

[last change: Decree-Law n.º 190/2015, 10th of September]

Decree-Law n.º 72/95, 15th of April – Regulates Financial Leasing Companies

[last change: Decree-Law n.º 100/2015, 2nd of June]

Decree-Law nº. 149/95, 24th of July – Legal framework for the financial leasing contract

[last change: Decree-Law n.º 30/2008, 25th of February]

Statistical Information

Conditions of access to the statistical information by non-members:

 

1. On request, ALF will make available to any potential new operator wishing to study their entry in any of the sectors where ALF’s members are present, all the information that it possesses and that may be required for this purpose, without prejudice of the individualized data, if requested, being made available 6 (six) months after its distribution to the members who report data.

 

2. To access the statistical information pertaining to the activities of Financial Leasing and/or Factoring, the requesting entity must be a Credit Institution or a Financial Institution with the corresponding authorization by the Banco de Portugal, or with a pending authorization process, providing for this purpose the certifying documentation.

 

3. The statistical information request must be sent in writing to the e-mail address alf@alf.pt, accompanied with the mentioned documentation in the previous point, if applicable.

 

4. The standard historical track record of the statistical information will be of up to 5 years, with a case-by-case analysis for requests with a larger track record.

 

5. Depending on the volume of statistical information requested, the usual reply period shall be of 10 working days which may be extended to 20 working days depending on the volume and detail requested and the dimension of the historical track record.

Production of Portuguese Leasing
Production of Portuguese Leasing
European context of Leasing
European context of Leasing
Leasing Importance in the National Economy
Leasing Importance in the National Economy

 

Link to the conditions of access to the statistical information by non-members

Monthly statistical information - Equipment Leasing - July 2019

 

Monthly statistical information - Real Estate Leasing - July 2019