Equipment leasing Ireland: use it without buying it

A finance lease covers most of the equipment's life and nearly all of its cost, so your company carries the risks of ownership. An operating lease is shorter, leaves value in the equipment and the lender takes it back at the end. The two are treated differently in your accounts and for tax; our guide to finance lease vs operating lease in Ireland explains when each suits.

Yes. Irish limited companies can lease most business equipment, from IT and catering kit to vehicles and machinery, through banks, specialist leasing companies or suppliers' finance partners. Lessors look at your accounts, bank statements and the equipment's resale value. Very new companies may find it harder, as many lessors want to see a trading record before they commit.

Generally, yes. Lease rentals are usually deducted as a trading expense, in line with how they are charged in your accounts. Under section 299 of the Taxes Consolidation Act, where a finance lease or certain operating leases leave your company bearing the wear and tear, Revenue treats your company as the owner, so it claims capital allowances instead. Ask your accountant how your lease will be treated.

VAT is charged on each rental as it is invoiced, not on the full price at the start. A VAT-registered company can usually reclaim it through its VAT returns under the normal rules, with restrictions on cars. Spreading the VAT across the rentals is one of the main cash-flow differences between leasing and hire purchase.

The lessor prices the rental on the equipment's cost, the term, your company's accounts and the value it expects the equipment to have at the end. Equipment with a strong resale market usually gets lower rentals. Advance rentals and fees change the real cost, so compare offers on the total of all rentals plus any end-of-lease charges.

It depends on how long you will keep it and your tax position. Leasing spreads VAT and suits equipment you upgrade often, such as IT. Buying outright or on hire purchase means your company owns it and can claim capital allowances, including the Accelerated Capital Allowance on qualifying energy-efficient items. Our guide to hire purchase vs leasing compares the costs.

With a finance lease, you can usually extend for a small secondary rental, or sell the equipment as the lender's agent and receive most of the proceeds. With an operating lease, you normally return the equipment or upgrade to a new lease. Check the end-of-lease terms, return conditions and any charges before you sign.

No. The Accelerated Capital Allowance applies only to qualifying energy-efficient equipment that your company owns, not equipment it leases. If you want the 100% first-year allowance on items on SEAI's Triple E register, buying the equipment may suit better. Ask your accountant to compare the after-tax cost of each option.

Usually only by paying most or all of the remaining rentals, because the lease commits your company for the full primary term. Some lenders allow an upgrade to newer equipment by rolling the balance into a new lease, which adds cost. If you may need to change equipment within the term, ask about this before signing.