Leasing is tax-privileged under the interest barrier rule – and far too few people know it!
In our advisory conversations, we repeatedly find:
Tax considerations play virtually no role in the choice of financing instruments. This leaves enormous potential on the table.
The interest barrier rule prevents
🔹 larger and more highly leveraged companies (those exceeding the threshold of €3 million in annual interest expense) or
🔹 companies with strong earnings abroad
from fully deducting their interest burden for tax purposes.
A portion is simply disallowed and can only be utilized as an interest carryforward in future years.
The challenge in practice:
Treasury and tax departments often work in silos here.
🔹 Treasury rarely incorporates tax considerations into its financing strategy
🔹 The tax department correctly prepares the returns but rarely acts proactively
🔹 At year-end, the focus is on whether to capitalize the interest carryforward
🔹 The opportunity for optimization goes unrecognized
Yet the solution is right at hand: leasing is tax-privileged under the interest barrier rule!
Through the strategic inclusion of leasing, the actual tax burden can be noticeably reduced.
Our clients are regularly surprised when we highlight this additional advantage. Because when structured correctly, leasing is already highly attractive on a pre-tax basis!
The result:
Very favorable financing combined with tax privilege!
Are you already leveraging the tax advantages of leasing strategically?
Leasing is tax-privileged under the interest barrier rule – and far too few people know it!
