Leasing a container: full and partial payout, residual value, tax

How leasing works

With leasing, a leasing company buys the container from the dealer and lets you use it for a fixed term against a monthly instalment. Legally, the leasing company remains the owner. At the end of the term you return the container, take it over at a residual value agreed in advance, or extend the contract – depending on the model.

Because the container is often taken over at the end and leasing works like buying in instalments, we treat it here as a variant of buying. Formally it is a right of use.

Leasing is aimed almost exclusively at businesses and the self-employed. Container leasing is hardly offered to private individuals. Leasing is also generally only available for new containers, typically with terms of 24 to 60 months. For used containers, hire purchase is usually the suitable alternative.

The two basic models

	Full payout	Partial payout with residual value
What the instalments cover	full price plus interest and costs	only part; the rest is the calculated residual value
Monthly instalment	higher	lower
At the end	return, or takeover at a small price	residual value becomes due if the lessor demands it (put option)
Risk	low for the lessee	residual value risk usually with the lessee
Suitable for	long use, planned takeover	low instalment is the priority

The put option is the point most often overlooked: in many partial-payout contracts the lessor may require you to buy the container at the residual value at the end – even if it is now worth less. Conversely, you often have no right to take it over if it is worth more. Read this clause carefully before signing.

Worked example

A new 20 ft office container costs €10,000 net. Term 36 months, assumed interest 6 to 8% a year:

Model	Monthly instalment (net, approx.)	Sum of instalments	At the end
Full payout	€304–313	€10,950–11,280	return or takeover for a small amount
Partial payout, 20% residual	€253–264	€9,120–9,500	takeover for €2,000 if required
For comparison: cash purchase	–	€10,000 once	the container is yours

Instalments are calculated as annuities. Real offers often include handling fees, an insurance obligation and different interest rates. So always compare the total of all payments including residual value, not just the monthly instalment.

Tax and accounting (German rules)

• Lease instalments are business expenses. They reduce profit in the year they are paid.
• VAT is charged on each instalment and, if you are entitled to deduct input tax, is deductible monthly. There is no large VAT payment at the start.
• Attribution to the lessor: for the container to stay with the lessor for tax purposes, the non-cancellable basic term must, under the German tax authorities’ leasing decrees, lie between 40 and 90% of the customary useful life, and there must be no especially favourable purchase option. If not, the container is attributed to you – and the rules for purchase apply.
• Balance sheet: under German commercial law, the leased asset then does not appear on your balance sheet. Companies reporting under international standards treat leases differently.

Classification in the individual case is a matter for tax advice; the basics of depreciation are in Containers and tax.

Advantages and disadvantages

Advantages	Disadvantages
No large capital requirement up front	More expensive than a cash purchase
Fixed, predictable monthly instalments	Term usually non-cancellable
Instalments deductible as a business expense	Residual value risk with partial payout
Bank credit line stays free	Businesses only, credit check needed
Swap for a new container at the end possible	Used containers often not leasable

What to check in the contract

1. Total cost: add up all instalments, fees and residual value and compare with cash purchase and hire purchase.
2. Residual value and put option: how high is the residual value, who decides on takeover, and at what price?
3. Termination: usually excluded during the basic term. What happens if you no longer need the container early?
4. Insurance and maintenance: almost always your obligation. Clarify which insurance is required.
5. Return condition: what counts as normal wear, and what will be charged?
6. Relocation: may the container be moved, and must this be reported?

Who leasing suits

Leasing pays off for businesses that use a container for several years, prefer to deploy their capital in the core business and value fixed monthly costs. If you definitely want to keep the container and can pre-finance the VAT at the start, hire purchase is often cheaper. If you need it for one project only, rental is the better choice.

Important note

All figures are orientation values without guarantee based on the stated assumptions. The tax attribution of lease contracts depends on how they are drafted; this article does not replace tax advice.