Banking and Financial Services
Financial Leasing is an alternative way of financing whereby a licensed leasing company (the “Lessor’) purchases an asset on behalf of its customer (the “Lessee”) in return for a contractually agreed series of payments which usually include an element of interest. The lessor maintains ownership of the asset while the lessee enjoys the use of the asset for the duration of the lease agreement, usually accompanied by an option to buy the asset at the end of the contract. The lessee bears all costs and risks associated with the use of the leased asset.
The Finance Leasing law (72(I)/2016 (the "Law") entered into force, in Cyprus, on 28 April 2016 with a further Financial Leasing Directive (the "Directive") issued by the Central Bank of Cyprus on 17 February 2017.
The purpose of this legislation is to provide a regulatory and supervisory framework for the operation of financial leasing companies providing leasing services to the public.
Currently, in Cyprus, a number of local Banks and private companies offer Finance Leasing services. The new directive by the Central Bank coupled with the new accounting requirements set by IFRS16 present a new challenge for organisations already operating in the leasing sector as well as for new entrants.
The purpose of this publication
- Outline the regulatory and supervisory framework around financial leasing in Cyprus
- Explore the different types of permitted services and exclusions
- Identify the requirements for being granted a license by the Central Bank of Cyprus
- Provide an overview of how Deloitte can support its clients