Lease vs. Borrow Problem after Tax Reform in Slovak Republic
Lease vs. Borrow Problem after Tax Reform in Slovak Republic

Summary/Abstract: The paper deals with the problem of effectiveness evaluation of long-term property financing through financial leasing, emphasizing the application of quantitative methods within this area. The aim was to focus on defining the financial flows relevant for the analysis, as well as on the derivation of the basic model of the financial leasing effectiveness. The aim of the presented paper is to elaborate the methodology for evaluation of effectiveness of financial leasing under the conditions prevalent in the Slovak Republic. The review of literature devoted to valuation of leasing contracts indicates, that consensus in the field of suitable methodology for valuation of leasing investments does not exist. The authors above mentioned corresponded to tax modification of financial lease before adoption of tax reform in Slovak Republic, when the lessor amortized the lease subject and transferred the benefits of lease mode of depreciation indirectly on lessee in the form of lease payment, representing for him the fully acceptable tax item. For conditions stated by regularization of financial lease and practical use the formula needs further modification.

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