I.- Concept.
Leasing is a contract by which one party gives to another for a specified term, the use of an asset, in exchange for a periodic fee. The user can, at the end of the contractual term, choose to renew the contract, return the property or purchase the goods for a residual price.
II.- Applicable Legislation.
Leasing is subject to the 7th Additional Provision of the Law on Regulation and Control of Credit Institutions of July 29th, 1988, and the Law on Instalment Sales of Movable Property of July 13th, 1998, which regulates registration in the Movable Property Registry (Royal Decree December 3rd, 1999).
III.- Elements of the contract.
Personal
– User.
– Pursuant to Law of 14th of April 1994 on the adaptation of the Banking Coordination European Directive of 1989, leasing companies shall be incorporated as financial credit institutions.
Material
– Movable Property, in which case the minimum duration of the contract is 2 years.
– Real Estate Property or Industrial or Business premises, in which case the duration of the contract is 10 years.
Formal
– The contract shall be in writing, even when it remains a private document.
IV.- Advantages
Flexible in terms, quantities and access to services.
Each payment is considered as a tax expense.
Opportunity for technological renovation.
Speed of the operation.
V.- Disadvantages
Access to the ownership of the property is only by executing the purchase option, usually at the end of the contract.
The return of the goods is not possible until the end of the contract.
Existence of penalty clauses for default in contractual obligations.
Vilá Abogados
For more information, please contact:
6th of August 2013
