For capital-intensive manufacturers, leasing is often far more attractive than purchasing outright from cash reserves. The asset itself serves as primary collateral, keeping your general banking facilities unencumbered.
- Asset-backed security: reduced calls for secondary collateral
- Fixed monthly instalments aligned with depreciation periods
- Clear choice between economic ownership (finance lease) and pure usage (operating lease)
Finance lease versus operating lease
Under a finance lease, you take on economic ownership: the asset appears on your balance sheet, you claim capital allowances, and you can leverage applicable investment tax deductions. At the end of the term, ownership transfers to you. Under an operating lease, you pay solely for use; residual value risk and typically routine maintenance remain with the leasing provider.
The decision is rarely driven solely by tax. The decisive factor is the pace of technological obsolescence. For a CNC milling machine with a 15-year service life, a finance lease is logical; for hardware likely to become obsolete within three years, an operating lease makes far greater commercial sense.
Tax incentives to consider
Investments in capital equipment may qualify for the small-scale investment allowance (KIA) and, for energy-efficient or environmentally sustainable assets, the energy (EIA) or environmental investment allowance (MIA). These Dutch tax schemes are revised annually; always confirm current criteria and eligible asset lists prior to committing to a capital expenditure decision.
Frequently asked questions
Can I lease second-hand or refurbished machinery?
Yes, although the lease tenor will be restricted to the remaining economic lifespan and the required initial deposit is typically higher. An independent valuation report is almost invariably required.
Does equipment leasing impact my bank borrowing capacity?
A finance lease appears as a balance sheet liability, but because the asset itself provides the underlying security, it leaves your other commercial collateral free for working capital or commercial property finance.