1. Lease Financing in Greece
Gauri Devpura
Roll No. 864
V Semester

2.  In Greece, leasing is regulated under Law 1665/1986
"Finance lease contracts (Leasing)".
 In article 1 of the above mentioned law the definition of
finance lease contract is given as follows:
1. Under a finance lease contract the lessor (the leasing
company as it is described in Article 2) has to convey to
the lessee, in return for rent, the right to use the
movable asset destined for the enterprise or the
profession of the lessee, giving him, at the same
time, the option either to purchase the asset or to
renew the contract for an agreed period of time. The
contracting parties may prescribe that the purchase
option may be exercised before the expiration of the
contract period.
2. A movable asset which the leasing company (lessor)
had previously purchased from the lessee may be the
subject of a finance lease between these parties.

3.  The introductory text of the draft law on
"Finance lease contracts (Leasing)"
gives the following clarification: "The
term finance lease has been preferred
to any other term referring to financing
or credit, to avoid confusion with a bank
credit.”
 Under Law 1665/1986 no distinction is
made between finance lease and
operating lease. Therefore no specific
definitions of these terms are provided

4.  In practice as well as in the Greek law and
the Greek General Accounting Plan, there is
no distinction between finance leases and
operating leases as far as the accounting
treatment suitable for them is concerned.
 The law for finance leases addresses only
movable assets, it provides for the "sale and
leaseback" form of leases, it does not make
any distinction between finance leases and
operating leases and it does not impose any
disclosure requirements for the leases in
the financial statements.

5.  Rules issued by other regulatory
bodies on lease contracts Lease
contracts are not addressed by other
regulatory bodies in the following
countries:
- Denmark
- Greece
- Italy
- Portugal

6.  In the following countries the national
professional bodies have not issued any
recommendations or rules on leasing
contracts:
- Belgium
- Denmark
- France
- Greece
- Italy
- Luxembourg
- Netherlands
- Portugal
- United Kingdom

7.  In Greece neither the Company Law (L.
2190/1920) nor the General Accounting Plan
(Decree 1123/1980) deal with accounting and
disclosure requirements regarding lease
contracts.
 Since 1986 a specific Law (L. 1665/1986)
for finance leases is applicable in Greece
providing that:
a) from the point of the lessee.
1. The leased assets with their nominal
value are included in memo accounts
(debit accounts-credit accounts) of the
balance sheet, together with other items
as off-balance sheet items;

8. 2. The rents involved in a lease are
included as operating expenses in the
financial statements together with other
items.
3. This rent is deductible from the gross
income.
4. The lessee is entitled to make either tax-
free allowance or tax-free reserve for
productive investments (article 19 of the
law 1892/1990, amended article
6, sections 9 and 10 of the law
1665/1986). These provisions are
accounted for on the liability side of the
balance sheet.

9. b) from the point of lessor
1. The leased assets either are shown
separately from other assets in the
balance sheet or are disclosed in the
notes to the balance sheet the
lessor.
2. There is no distinction between
finance leases and operating leases
in the balance sheet;

10. 3. the lessor is entitled to account for the
depreciation on the leased assets as if they
had been acquired by the lesseestraight line
basis for depriciation is used, according to
the decree 88/1973 concerning the
depreciation of fixed assets;
4. The rents are treated as income on accrual
basis and they are shown in the profit and
loss account together with other items (e.g.
turnover: rents and commissions).
5. the lessor is entitled to make tax-free
allowance for doubtful debts

11. Comparision
 When looking at country level, large
differences in the use of leasing appear.
 As per European Commission survey:
 35.7% of small and Medium entreprises
(SMEs) used leasing, hire-purchase or
factoring in the whole EU.
 However, while more than half of all SMEs
made use of these instruments in
Estonia, Sweden and Germany, only a
relatively small fraction of SMEs used these
financing sources in Cyprus, Malta, and
Greece.
 In Greece only 13.3% of SMEs used these
services.

12. Who can receive Financing
through Leasing?
 Financial Leasing is a financial tool used by companies
and/or freelancers for obtaining and using capital assets for
their productive and investing purposes.
 Pursuant to Article 1 of the Law, notwithstanding the lessee’s
nationality and/or place of establishment, the asset leased by
means of a financial leasing should solely be destined for the
lessee’s professional use. Thus, any person (legal
entity, natural person) may be eligible to contract a financial
leasing agreement as long as such persons exercise any kind
of profession or business activity and intends to use the
leased asset for such purposes.
 On the contrary, employees, consumers, public servants
and/or any other person not conducting a commercial
business activity are not entitled, in principal, to financial
leasing.

13. Which are the entities entitled
to provide financial leasing?
 Pursuant the provisions of Law, as currently in force, leasing
contracts may only be concluded by the following entities as
lessors:
1. leasing sociétés anonymes established with the object of
conducting the operations referred to in Article 1 of the Law;
2. credit institutions, within the meaning of Article 1(a) of Law
3601/2007, lawfully established and operating in Greece;
3. credit institutions, within the foregoing meaning, based in
EEA Member States and established in Greece through
branches or providing cross-border services in Greece,
within the meaning of Articles 13 and 15 of Law 3601/2007;

14. 4. credit institutions, within the foregoing meaning, registered in
third countries and established in Greece through branches;
5. financial institutions, within the meaning of Article 2(11) of
Law 3601/2007, based in EEA Member States and
established in Greece through branches or providing cross-
border services in Greece, under Article 18 of Law
3601/2007; and
6. financial institutions registered abroad and established in
Greece through branches.
 The establishment of leasing companies in order to conduct
leasing activities in Greece is subject to authorization by the
Bank of Greece, which is responsible to supervise and
control such companies, define the conditions of
authorization and set solvency, liquidity and risk
concentration ratios.

15.  Pursuant to the Law, as amended and
currently in force, any asset could in fact
become the object of a sale and lease back
transaction. In practice however, sale and
lease back transactions are mainly
encountered in real estate (commercial
buildings) transactions.
 The Law provides minimum term
requirements for leasing transactions
depending on the asset leased. Thus the
minimum lease term for equipment is three
(3) years, for aircrafts five (5) and for real
estate ten (10) years.