The financial benefits and rules of business leasing

Leasing is not just about splitting the payment, but also about using your company's money more smartly. When you invest in equipment, machinery, fixtures or IT, you basically have two options: buy or lease. For many businesses, leasing can offer some clear financial benefits.

Keep the money in your business

If you need to invest DKK 1,000,000 in new equipment, a cash purchase means paying the full amount straight away. With leasing, you instead spread the payment over, for example, 24, 36, 48 or 60 months. This means you can keep more liquidity in the business. The money can instead be used to create growth, buy stock, hire employees, invest in sales or simply give the business stronger liquidity.

The equipment works for the business while you pay for it over time.

Tax benefits of leasing

To make it easy, we have made a concrete example.

If the business buys equipment for DKK 1,000,000, it can as a starting point be depreciated by up to 25% of the remaining balance per year, which means that in this example it takes around 13 years before the whole investment is fully depreciated for tax purposes.

If the business leases the equipment for 24 months, the lease cost is deducted as it is incurred. When the 24 months have passed, the entire lease cost has been deducted and written off for tax purposes. So choosing leasing can give a significantly faster deduction profile than a traditional purchase. This is interesting because a deduction today can be worth more to the business than the same deduction many years in the future.

preserve liquidity for growth

If your business has DKK 1 million available to invest in equipment, it can be a good idea to lease the equipment and keep a large part of the liquidity in the business. If that money can be used to create more revenue or growth, leasing can be a far more effective way of using the company's liquid funds.

It is not only about what the equipment costs or whether you can afford to buy it, but also about whether the money can be used more smartly elsewhere.

Get more predictable and flexible finances

With leasing, the investment is spread over an agreed period. Instead of a large one-off payment, the business gets a predictable monthly lease payment. This makes it easier to budget and plan the company's finances. You know what the lease costs month by month and can at the same time use the equipment to generate revenue.

As a business it is important to consider where the money creates the most value. Leasing can make it possible to invest in necessary equipment without tying up the full amount in the asset. You get access to the equipment the business needs, while keeping your financial freedom of action.

Buy or lease?