"Leasing? Hardly relevant for us."

"Leasing? Hardly relevant for us.
Only our subsidiary in the UK is very active in that space!"

said the Head of Treasury of a larger PE-backed corporate group.

We frequently observe with clients that foreign subsidiaries (most commonly in the UK, often in the Czech Republic, and recently in Italy) use #Leasing much more actively as a local financing tool than the German entities within the group or the German holding company.

In comparable situations, we have worked with our clients to implement optimizations:

👉 Leasing should be utilized within the group primarily in the country where it can be obtained most cost-effectively!

Germany presents a compelling case due to:
🔹 its highly competitive market,
🔹 its capable and well-established leasing companies,
🔹 significantly lower base rates and credit spreads compared to, for example, the UK, and
🔹 where applicable (e.g., #LBO), tax advantages under the #InterestBarrier rule.

Foreign subsidiaries within the group can be financed from Germany via intra-group loans – as leasing generates additional liquidity within Germany.
This approach also delivers further advantages under the interest barrier rule, in the form of additional interest income for the German holding company or the German fiscal unity.

Dear CFOs,
Dear Treasury professionals,
👉 Is the approach in your organization similar?
👉 What do you think of this concept?

Let's talk!

#CFO #Treasury #LBO #PrivateEquity