What is meant exactly by these terms, often used incorrectly in everyday speech?

Leasing is a contract by which the lessor, in exchange for payment, gives the right to use an asset for an agreed period. The leasing company remains the legal owner of the asset throughout the contract. The ownership of the asset may or may not be transferred to the lessee at the end of the contract. Contracts which provide for the direct transfer of the legal ownership of assets to the customer from the start are not considered as leasing contracts.
Legal framework
Leasing was introduced in Belgium in November 1961. However, it had to wait six years, and more specifically for Royal Decree no. 55 of 10 November 1967, to be given legal status.
This royal decree, still applicable today, determines the criteria which the transactions must meet and sets the principle of approval by the Federal Public Service Economy in order to be able to practise this activity.
It distinguishes non-real estate leasing from real estate leasing:
- Non-real estate leasing
- must be based on capital goods for business use
- the lessee chooses the equipment itself
- the term of the lease corresponds to the estimated economic life of the asset
- the amount of the lease payments is established so as to amortise the amount of the investment over the term of the lease
- the lessee can become the owner of the asset by exercising the purchase option
- Real estate leasing
- must be based on constructed buildings (i.e. it is not possible to take real estate leasing on land only)
- the term of the leasing contract must be fixed and the contract cannot be terminated
- the lessor must give the lessee enjoyment of the building and land on which it is erected
- the lessee can become the owner of the asset by exercising the purchase option
Commercial environment
The market distinguishes two possible leasing schemes:
- Financial leasing: this is the oldest and simplest scheme, in the sense that few services are associated with it. It has the advantage of spreading the payment over a defined term.
Although the lessor is always the legal owner of the asset during the term of the leasing contract, in practice, it is the lessee who benefits from the asset as if they were the owner, i.e. it is the lessee who bears the risks and draws the benefits resulting from the ownership of the asset.
- Operational leasing: this is often accompanied by a range of additional services, i.e. in addition to administrative and financial functions, the lessor provides support as well as technical management of the assets.
Here, the lessee does not bear the risks or draw the benefits of ownership.
Accountancy framework
When leasing appeared on the Belgian market, transactions were not recorded in the annual accounts of the lessee. The lessee treated these leasing transactions as lease contracts and recorded the regular leasing payments in its accounts as general expenses.
As such, the company did not show in its annual accounts the obligations arising from leasing and its commitments were therefore underestimated.
At the request of the Banking Commission (now FSMA), the Royal Decree of 8 October 1976 was established. This changed the accounting principles of leasing transactions. Indeed, this decree states that the accounting treatment of leasing transactions will be based on the economic ownership of the asset (and not exclusively on the legal ownership rights).
One of the results has been to force the lessee to show leasing transactions on its balance sheet. This is not the case, however, for leasing of non-real estate assets with purchase options of over 15% as well as for some forms of real estate leasing.
08.11.2017
Is leasing also suitable for your company?
If you haven't yet dared take the leap... take the test. It only takes a few minutes and you could save a lot of time and lots of money!
Ask the right questions
- Do you already have several "traditional" financing obligations at present?
- Are you nurturing short-term projects that will require use of your liquid funds?
- Would you like the option of regularly renewing your equipment (cars, computers, etc.) and not having to worry about re-selling?
- Would you like to stagger payment of VAT linked to your purchase?
- Do you want to benefit from additional tax advantages?
Choose the leasing that suits you best
- Are you searching for a solution that won't affect your balance sheet?
- Are you thinking of purchasing the equipment upon maturity of the leasing contract?
- Would you like to rid yourself of any administrative formalities (ordering, follow-up, maintenance, etc.)?
- Are you looking for an "all-inclusive" package (insurance, assistance, etc.)?
- Do you want to pay the same amount every month/quarter or a higher initial payment?
- In the case of vehicle or IT leasing, how many vehicles (commercial and/or passenger) or computers do you require?
The answers to these questions will allow your relationship manager to better define your needs and to determine the type of leasing you require. Please contact him or her if you require any further information.
08.11.2017
Leasing: on-balance or not? And how to deal with VAT?
It's not always easy to navigate your way through the maze of leasing legislation. Our specialists explain.

Can the customer choose not to enter its leasing on its balance sheet?
Philippe Tilkin, Marketing & Solutions Manager at BNP Paribas Leasing Solutions:
“This depends on the scheme in question. In the case of leasing based on capital assets (car, IT or other), there are two possibilities. Either the purchase option is less than or equal to 15% of the investment amount and the lessee will amortise it on their balance sheet (on-balance sheet leasing). Or the purchase option is greater than 15% of the investment amount and they could book it as general expenses on their income statement. This will allow them to reduce their taxable profit and therefore the amount of tax to be paid. The transaction will then be entered on the balance sheet of the lessor and not on that of the lessee (off-balance sheet leasing).
There are also two options if the leasing relates to a building. Either the capital is fully repaid during the term of the lease (full pay out) and then the transaction is accounted for on the balance sheet (realisation and amortisation by the recipient, debt on the liabilities side). Or the transaction is not fully paid out – usually a contract with a residual value of 10% for the building, plus the value of the building lot if part of the lease – and then the transaction is not accounted for on the balance sheet (the leasing payments are considered costs).
I would like to stress that all this is ‘within the meaning of current legislation’, as the international accounting regulations seem to be gaining ground. As such, it could be that, in future, any transaction arising from leasing must appear on the balance sheet of the lessee. However, nothing has yet been decided. And I add the advice of Mr Tanguy van de Werve, Managing Director of Leaseurope (professional association representing the European leasing industry), who confirms that in a context where the European political decision-makers are striving to promote access to productive assets to boost growth, playing with the current leasing accounting model would carry considerable risks.”
How should the customer deal with VAT?
P. Tilkin: “Leasing allows companies liable to VAT to pre-finance it and spread the cost over the term of the contract. Furthermore, they can recover the VAT on leasing payments, and also on the interest included in the leasing payments. Finally, if the maintenance and repair costs are covered by the lessee, they are also liable for VAT and are therefore recoverable.”
Marc Melis, Sales Director at Arval: “In the context of vehicles, one of the advantages of operational leasing is the fact that the client only has to fulfil part of their VAT obligations, calculated on the delta between the initial investment and the salvage value of the vehicle at the end of the contract. Companies liable to VAT can recuperate part of the VAT paid by means of their monthly leasing payments. This recovery is done by way of VAT administration which, since January 2013, has established various methods in order to determine the level of recovery depending on the ratio of professional/private usage (with a maximum of 50%).”
P. Tilkin: “In terms of real estate leasing, the distinction should be made between recent buildings or buildings to be constructed, which are liable to VAT – and therefore recoverable provided that the recipient is liable to VAT and entitled to deduction –, and old buildings which do not fall under the VAT system. Consequently, you do not need to pay VAT on the rents.”
20.01.2023
Electric cars are fast becoming the norm
As of 2026, a favourable tax scheme will only apply to electric company cars. This is an important step towards – and extra reason to go all out for an emission-free fleet. 1 July 2023 will be a turning point.
The evolution towards more sustainable company cars has now also been laid down by law. Thanks to a number of tax changes, electric company cars or e-cars will be the most interesting choice from now on. The perfect time to start electrifying your fleet already today.
"1 July 2023 is an important turning point for making the transition to electrification," says Philippe Kahn, Mobility Solutions Expert at Arval, the specialist in operational leasing of commercial vehicles. "An employer can deduct significantly less costs for fossil-fuel-powered cars from that date. Hybrid vehicles can still enjoy more favourable tax scheme for a while. Nevertheless, companies should take into account that, as of 1 January 2023, they will only be allowed to deduct 50% of the fuel costs for their hybrid cars."
Electric driving isn’t just more tax-efficient
Electric cars are already 100% tax deductible. "Meanwhile, of the cars leased today, 40% are electric. This upward trend is clear. Until recently, the sensitively higher purchase price of an electric or hybrid car versus that of a comparable car with a combustion engine was a brake. Meanwhile, besides the effect of the shift in taxation, the market mechanism is bringing prices closer together," says Kahn.
But tax deductibility and purchase price aren’t the only factors to consider. In making this choice, it’s actually better to look at the TCO (Total Cost of Ownership). This includes all expected costs. In addition to the tax aspect, consider consumption, maintenance and CO2 contribution. And these four elements are all more favourable for electric cars. If you use the TCO rather than purchase price as a yardstick, you’ll see that a green fleet of e-cars will be the most advantageous choice for your company in the future.
Electric driving gaining momentum
The tax regime for cars running on fossil fuels is gradually changing. Yet the changes in 2023 will remarkably accelerate the move to electric driving. More than ever, it is clearly time for a new mobility.
- Until 30 June 2023
For company cars ordered before 1 July 2023, the current conditions regarding tax deductibility will continue to apply. For company cars that are leased or rented operationally and for which the beneficial ownership is not transferred, the closing date of the lease or rental contract is considered. The costs of a diesel, petrol or hybrid car remain 50 to 100% deductible, while the costs of electric cars remain 100% deductible. - Between 1 July 2023 and 31 December 2025
For non-emission-free vehicles ordered as of 1 July 2023 until 31 December 2025, a transition period will apply, and the deductibility is gradually phased out. From a maximum of 75% in 2025, to 50% in 2026, to 25% in 2027, and ultimately 0% deductibility in 2028. As of 2025 the minimal deductibility of 50% is abolished. The CO2 contribution for these cars will also increase significantly each year. Emission-free cars will remain 100% deductible. - As of 1 January 2026 onwards
Non-emission-free vehicles ordered as of 1 January 2026 will no longer be deductible. Only emission-free vehicles such as electric cars will then be 100% deductible. But this favourable scheme will also be gradually phased out over the next few years, to 95% for vehicles ordered in 2027, to 90% in 2028, to 82.5% in 2029, 75% in 2030 and eventually to 67.5% in 2031. - Plug-in hybrids (PHEV)
For plug-in hybrids (PHEVs) ordered as of 1 January 2023, the tax deductibility of petrol and diesel costs will be limited to 50%. Electricity and other costs are not covered by this restriction. This measure is designed to encourage the use of electric motors and PHEV. Otherwise, PHEVs will continue to follow the non-emission-free vehicle rules.
And for your employees?
The status of the company car as an alternative remuneration will remain in place until after 2030. “If you allocate a company car that your employee can also use privately, this benefit will be taxed as a fixed benefit in kind. That depends on the list price, fuel type and the CO2 emissions. Although electric vehicles generally have a higher list price, zero emissions can make up the difference and in many cases, turn out favourably for your employee.”
What about charging?
To help your employees make the most of an electric car, you can have a charging station installed at their home if possible. Both the device and the installation at your employee's home are 100% tax deductible and there is no additional tax benefit for them.
“As a company, you can, under certain conditions, benefit from an increased cost deduction for the installation of charging stations on your company premises. This amounts to 200% for investments made in the period from 1 September 2021 to 31 December 2022 and 150% for depreciations relating to investments made in the period from 1 January 2023 to 31 August 2024. A condition is that the charging station is depreciated linearly over at least five taxable periods and at the earliest as of the fiscal year that is linked to the taxable period during which the charging station is operational and publicly accessible”, Kahn concludes.
Switch to an electric fleet
In addition to favourable tax conditions, there are many other excellent reasons to opt for electric cars today.
- It is an environmentally friendly solution that leads to 17-30% less CO2 emissions than the emissions from ICE (Internal Combustion Engine) vehicles throughout the entire life cycle of the vehicle.
- A wide range of new models is already on the market today and will only increase in the coming years.
- Most new models already have a driving range of 300 to 600 km.
- Advantageous Total Cost of Ownership (TCO).
- Electric driving is pleasant and causes much less street noise.
- The public charging infrastructure is expanding rapidly.
- Access to low-emission zones and cities that ban diesel and petrol-vehicles.
Nowadays, responsible fleet management is built around sustainability. Don't wait any longer to electrify your fleet and reduce your company’s ecological footprint. Our mobility partner Arval will help you to make your fleet more sustainable and support you in your transition to electric vehicles.
Discover all our solutions or discuss them with your relationship manager.
Lessor: ARVAL Belgium NV/SA Ikaroslaan 99, B-1930 Zaventem - RPR Brussels - VAT BE 0436.781.102.
02.05.2022
Opt for a more sustainable mobility offer thanks to bicycle leasing
Sustainability isn't a hype – it's a must. The transition is also in full swing in terms of mobility. With bicycle leasing, you offer your employees a high-quality bicycle package and choose a more sustainable mobility offer. And it's tax efficient.

Cycling to work is popular
Not only our way of working has become hybrid; so too has the way we travel to work. More and more people are seeing the benefits of cycling to work, whether or not electric. An e-bike or speed pedelec is no longer just a gadget. Thanks to these, you can now comfortably cycle longer distances. So, bicycles are certainly part of a sustainable mobility policy. Bicycle leasing allows you to offer your employees a healthy and sporty option that reduces your organisation’s carbon footprint.
How does bicycle leasing work?
Bicycle leasing is much more than just financing bicycles. Maintenance, repairs, breakdown service and insurance are all included in the package. With Bike Lease, our mobility partner Arval offers an operational, full-service solution for 36 months. With over 120 brands and all types of bicycles, the range is extensive: city bikes, sports bikes, e-bikes, speed pedelecs, mountain bikes, folding bikes, etc. Your employees choose the bicycle that suits them best. An annual maintenance budget is provided for maintenance and repair by professionals. Bike Lease also includes indemnity for accidents, theft and vandalism of the bicycle with a fixed excess based on the value of the lease bike. And finally, a 24/7 breakdown service is provided within 45 minutes, anywhere in Belgium.
Good for everyone
Including bicycles in your mobility offer offers both your company and your employees many advantages.
- Tax-efficient
The leasing costs are deductible for your company if your employees use their bikes to commute. By using this bike to commute, they avoid a taxable benefit in kind.
- Healthy
Cycling makes healthier and fitter employees who suffer less from stress. And your company benefits from this as well.
- Affordable
A bicycle is a cheaper alternative or complement to a company car for short to medium-distance trips. You save on fuel, maintenance and parking costs. It also allows you to offer mobility to a wider target group.
- Flexible
Once your employees have chosen a type of bicycle, they decide for themselves when they pedal to work. Through all kinds of weather, when the sun is shining or when there are too many traffic jams and a bicycle is the perfect alternative to a car. They can also enjoy their bikes in their free time.
- Sustainable
A bicycle has of course a low ecological footprint and fits perfectly in a sustainable mobility policy. By offering your employees a bicycle, your company emits less CO2 and your organisation becomes more socially responsible.