The development of leasing in Poland – opportunities and perspectives

Leasing is primarily a form of investment financing that includes both the features of the lease contract and the loan. On the one hand, the beneficiary (lessee) is entitled to use non-proprietary goods, on the other hand, the user, while paying for the use of the leased asset, also repays its value.

Leasing – development, functions and goals

Leasing is primarily a form of investment financing that includes both the features of the lease contract and the loan. On the one hand, the beneficiary (lessee) is entitled to use non-proprietary goods, on the other hand, the user, while paying for the use of the leased asset, also repays its value.

Until the end of the 1980s, leasing almost did not function in Polish economic practice. The lease owes its dynamic development in the 1990s to systemic and economic changes in Poland and the accompanying changes in commercial law. It is worth noting, however, that in the case of leasing, the business practice was far ahead of changes in the law. Although the leasing contract regulations were introduced into the Civil Code only in 2000, already before that date, the lease agreements were operating in the course of trade.

In the initial period, the main objects of leasing contracts were means of transport as well as machinery and equipment used in business operations. Over time, the scope of fixed assets financed through leasing has been extended, including also hardware and computer licenses, real estate and all other fixed assets.
The first area under which the leasing regulations appeared was tax law. Included in the provisions on income tax are many criteria according to which the subject of the leasing contract was qualified as a fixed asset of the beneficiary or the financing party. Above all, however, these provisions made it possible to make depreciation write-offs for tax purposes by entities that do not own fixed assets, which was an unprecedented solution. Development as the first tax regulations in the field of leasing is not surprising – it is primarily the tax aspects of leasing that determine its popularity. An especially attractive form of leasing from the perspective of the user is operating leasing, which on the basis of income tax regulations allows for much faster than in the case of financial leasing or other sources of financing (credit, own funds) by reimbursing the value of fixed assets to tax costs. While in the case of financial leasing, the cost of obtaining revenues from the user are depreciation write-offs from the initial value of the leased asset, while in the case of operating leasing, these are the individual leasing installments. Also due to VAT regulations, financial leasing was not and currently is not as popular as operating leasing.

This results from the recognition that the release of goods under a finance lease agreement, if the contract meets certain criteria, constitutes a supply of goods subject to VAT tax in advance when the goods are released. Although the payment of leasing installments is spread over time, the party using the financial leasing contract requires payment to the financing VAT in advance of the total initial value (capital part) of the leased asset and the sum of all interest (interest portion).

Until now, the financier has posed some difficulties with the lack of adaptation of the income tax legislation in the scope of leasing to the practice of the functioning of leasing contracts. These provisions were introduced in 2001 and for the next ten years they were not subject to any changes, even though the regulation required the determination of the initial value of the leased asset again based on a new lease agreement – until now, literally treated provisions required the historical initial value of the object contract, which was not practically feasible (because no financiers can count on getting a repayment of the initial initial value in relation to a thing that was previously in use – an exception here are real estate that can gain value over time) .

Despite the significant evolution of the tax authorities’ approach to issues related to leasing, and despite the introduction of several significant changes in the leasing taxation from January 1, 2013 on the basis of the Act of November 16, 2012 on the reduction of some administrative burdens in the economy. III deregulatory act, it can be safely stated that if anything inhibits its further dynamic development, these are precisely imprecise tax regulations and divergent interpretations by individual tax authorities. The perception of leasing by some entrepreneurs as a complicated financing tool results also from the total inconsistency between individual regulations regarding issues related to leasing. One should realize that each of the acts, namely the Civil Code, the Income Tax Act, the VAT Act and the Accounting Act, define or treat leasing in a different way.

Certain unification of interpretation in the area of ​​leasing on tax ground was undoubtedly influenced by the introduction from 1 July 2007 of the principle according to which an individual interpretation of the provisions is made at the request of the taxpayer by the Minister of Finance. In addition, the financiers themselves strive to offer solutions that are legal and tax-safe. Therefore, emerging tax doubts or potential risk on the part of users become the basis for modification of contracts and leasing products. They also evolve the needs of customers who were initially interested in simple forms of using fixed assets, and now they can expect from the leasing company additional services related to the use of the leased object (for example in the form of servicing and fuel cards in the case of car leasing).

Lack of legal regulations in the 90s of the last century did not stop the development of leasing, thanks to which in the period from 1992 to 1996 the value of leasing transactions in Poland increased almost nine times, reaching USD 750 million in 1996. Also in recent years there has been a significant increase in the volume of transactions – in 2007, the record-breaking dynamics for the industry, the transaction value amounted to PLN 32.7 billion, increasing by 49.6% compared to the previous year. In 2008, despite the serious problems of the transport industry and, as a consequence, the negative dynamics of leasing of heavy goods vehicles and the economic downturn in the third quarter of the year associated with the growing financial crisis in the world, the value of transactions amounted to over PLN 33 billion. In the following year, we have already clearly unleashed the effects of the crisis on the financial markets. In 2009, objects worth PLN 23 billion were put into use. ie 30% less than the year before. The years 2010 – 2011 are a period of systematic market reconstruction. In 2011, the industry financed objects worth PLN 31.1 billion. The next year is a period of a significant slowdown in turnover, in which the market increased by only 0.3% reaching the value of PLN 31.2 billion.

The total value of the active portfolio at the end of 2012 in the amount of PLN 61.54 billion (PLN 53.44 billion for movables and PLN 8.10 billion for real estate) is comparable to the value of investment loans granted to companies by banks (PLN 79.06 billion) , as of 30/11/2012). Leasing is still the main, next to the loan, external source of financing investments in the economy.

Companies in the leasing industry see opportunities for further market growth in the development of consumer leasing. However, despite the possibility of its application in the provisions of income tax acts from July 1, 2011, it is still not popular – this time due to unclear provisions regarding consumer credit. As it seems, this is the reason why the average share of consumers in the European leasing market in 2007 was 15%, while in Poland only about 1 per mille.
In order to facilitate the unhindered development of consumer leasing, it is necessary to clarify the provisions regarding consumer credit so that it is possible to precisely determine which of the lease agreements are covered by these regulations and which are not. A change in regulations in this area was planned in the so-called IV deregulatory act. The effects of the financial crisis may also be offset to some extent by investments supported by funds from EU funds. The use of funds from the funds often depends on obtaining an external source of financing – leasing may be an instrument helpful in this respect, as this expenditure may be reimbursed from EU funds.

As leasing is a tool for financing investment processes, the pace of economic development and an increase in investment outlays will have a direct impact on its further development. An additional difficulty is that leasing companies raise funds in virtually the same sources as banks. As a result, the difficult situation on the financial markets and difficulties in obtaining financing have so far not affected the development of the leasing market. Finally, since leasing is a tool used by taxpayers to a significant extent also due to tax benefits, and the subject of financing is mainly means of transport, the development of leasing is significantly influenced by tax policy, including, for example, variable VAT deduction rules from cars.

However, some optimism is aroused by the fact that the comparison of data on the value of gross fixed capital formation financed by leasing in other European Union countries shows that leasing in Poland is still used to a lesser extent. For example, in Poland in 2008, with the use of leasing, 13.8% of gross expenditure on fixed assets was financed, while in the EU this rate was on average 15.5%. The crisis on the financial markets has also had a negative impact on this index, as a result of which in Poland it decreased to the level of 11.6%, and on average in Europe to 13.3%. One of the reasons limiting the possibility of increasing the use of leasing in this respect is the unfavorable legal regulations for the development of consumer leasing and leaseback of municipal real estate, which products in other European countries are very popular. In recent years, ZPL has undertaken intensive actions aimed at changing this state of affairs, thanks to which new tax regulations enabling the development of consumer leasing appeared in July 2011. However, this did not completely eliminate the obstacles to the development of this type of leasing – this time, however, it results from imprecise regulations in the field of consumer credit. On the other hand, as regards the leaseback of municipal real estate, ZPL undertakes actions aimed at amending the provisions of the Real Estate Management Act, so that public entities may also benefit from the lease back properties.

Order a free leasing offer

go to the form