Sub-leasing is the transfer of rights to use leased property to third parties. In essence, this is a deal to lease movable or immovable property to the final lessee through an intermediary. The latter at the same time does not lose obligations under the contract with the lessor. Accordingly, upon completion or early termination of the lease agreement, the sub-lease agreement is also considered invalid.
Why do you need subleasing?
Any machinery, equipment, real estate, vehicles may be transferred to subleasing. Sub-leasing can be international, renewable, revolving and even fictitious.
Renewable sub-leasing provides for the replacement of leased property as new models appear, and revolving allows you to replace one technique with a completely different one according to the features and sequence of the production process chain. So, if at the beginning of the construction of the company excavators were needed for digging pits, and at the next stage construction cranes are required, then this equipment can be obtained by revolving leasing.
Thanks to the revolving and renewable subleasing, the Japanese government modernized the national production, while tax payments were significantly reduced and various benefits were introduced.
What is dummy subleasing?
The meaning of fictitious sub-leasing follows from its very name. The main objective of such fraudulent activity is to receive VAT refunds from the state. In simple words, company A acquires certain property, transfers it to its balance sheet and transfers it to company B under a leasing agreement, which subsequently transfers the property to subleasing and ceases to pay the lessor. In such a situation, an overpayment of VAT is formed and the right arises to demand tax refund from the Federal Tax Service. In fact, employees of the Federal Tax Service have long been aware of all the possible ways of fraud in this area, so it will not be possible to outwit the state.
Are subleasing and subleasing the same thing?
To understand the differences between subleasing and subleasing, it is necessary to analyze the lease and leasing transaction.
At first glance, the concepts of rent and leasing are identical in meaning, but there are several fundamental differences:
- The maximum rental period is 1 year, and leasing can be issued for a longer period.
- Land can be rented, but leasing can not be issued.
- The basic principle of the lease is that upon the expiration of the contract the property is returned to the owner, and the well-known lease with the right to buy out is nothing more than leasing, since in this case the lessee is not obliged, but has the right to redeem the property.
In addition, leasing has common features with lending, because in order to approve an application for leasing expensive property, it is necessary to show a good credit history, attract guarantors and collect income statements.
Nevertheless, there are several similarities between renting and leasing. At the time of the transaction, the owner is the one who provides the property, and the owner’s goal is to obtain financial benefits.
Thus, sublease is a transfer of leased property for a fee to a third party, and leasing is a sublease of a leased property by a lessee for a fee to third parties. It turns out that subleasing is one of the varieties of sublease operations.
Car subleasing
In everyday life, ordinary people are most often found with car leasing.The meaning of such a leasing is to transfer the car for use to another person in order to reimburse the lessee.
At the same time, the lessee cannot transfer the car to subleasing, if this is not provided for in the contract. The procedure for registering a car leasing requires less time and documents, so it is often preferred in comparison with standard bank loans.
When the need arises for a multi-month trip, that is, the leased vehicle will not be used, and payments must be made in a timely manner, then the sub-leasing procedure will solve the situation and save money. In addition, a premature termination of the contract by the lessee may be fraught with the payment of a penalty.
Features of the sub-leasing agreement
A sample sub-leasing agreement contains the following information:
- details of the parties to the contract;
- the term of subleasing and the possibility of its extension;
- amount and schedule of payments (monthly or quarterly);
- possible fines, penalties and compensation;
- rights and obligations of the parties to the contract.
Addition to the sub-leasing agreement is an act of acceptance of transfer of property. In the case of a car leasing, such an act shall indicate the make, model and color of the vehicle. The number of the engine and other main parts are also entered, after which the technical condition of the car parts is listed.