Leasing is a form of financing capital expenditure, where the leased asset is purchased by the leasing company (Millennium Leasing) and then given to the customer for use. In exchange for the possibility to use the asset the customer will make agreed monthly payments to the leasing company.
There are two types of leasing:
- operational – the leased asset is kept in the books of the leasing company, which makes depreciation write-offs; the monthly lease payments are tax deductible for the customer, who also has the possibility to purchase the asset upon end of the leasing agreement;
- financial – the leased asset is kept in the books of the customer, who makes depreciation write-offs. The financial part of the monthly leasing payments is tax deductible for the customer, while ownership of the asset gets transferred to the customer after the end of the leasing agreement.