For mid-sized companies, leasing is the instrument for liquidity and modern infrastructure. But any CFO running a German GmbH and a Swiss subsidiary soon finds that comparable lease contracts can have different effects on the balance sheet. While accounting under the German HGB closely follows tax decrees, the Swiss Code of Obligations (CO) and the Swiss Auditing Handbook (HWP) call for a decision between legal form and economic reality.
Germany: the world of leasing decrees
The HGB contains no specific leasing rules. What matters is who holds economic ownership of the leased asset (Section 246(1) sentence 2 HGB) – in practice, the tax leasing decrees are applied for this purpose. The key question is: are the criteria for a full-payout lease met?
The 40–90 % rule for movable assets
Economic ownership – and thus the obligation to capitalise for the lessee – is assumed if the basic lease term is less than 40 % or more than 90 % of the asset's normal useful life.
In the zone in between (40–90 %), the asset remains with the lessor unless there are “special economic factors” such as extremely favourable purchase options.
Special case: immovable assets
In real estate leasing, the building is often allocated to the lessee in the same way as for movable assets, while the land remains with the lessor – unless a favourable purchase option moves the entire property to the lessee.
Switzerland: the tension in the HWP RL
In Switzerland, the world of the Code of Obligations (CO) is shaped by the Swiss Auditing Handbook (HWP). There is a de facto option here, which is, however, disciplined by the “economic approach” (substance over form).
Control vs. legal form
The HWP RL refers to recognised standards. In practice, this means:
- Finance leases: If substantially all risks and rewards are transferred to the lessee (analogous to Swiss GAAP FER 13), the lease should be recognised. However, there are no “hard thresholds” set by regulation.
- Operating leases: These contracts generally remain “off-balance”. The disclosure in the notes is important: obligations with a term of more than one year must be disclosed if they cannot be terminated.
Quick check: finance vs. operating leases (DE/CH)
| Criterion | Germany (HGB/tax decree) | Switzerland (CO/HWP RL) |
|---|---|---|
| Principle | Formal compliance with the decree thresholds | Economic approach |
| Capitalisation criterion | Basic lease term < 40 % or > 90 % of useful life | Transfer of risks and rewards to the lessee |
| Options | No, formal legal approach based on the tax decrees | Yes, de facto option for capitalising operating leases |
| Notes/disclosure | Disclosure of operating leases as off-balance-sheet transactions under Section 285 No. 3 HGB | Disclosure of all off-balance-sheet long-term obligations that cannot be terminated within one year |
Conclusion: harmonising leases under HGB and Swiss CO
If the Swiss subsidiary exercises options and stays “off-balance” while the German parent recognises similar leases under HGB, consolidation produces significant differences in the equity ratio and leverage – and the informative value of the reporting suffers.
So review lease contracts for their effect in both jurisdictions while they are still in draft. Accounting is usually seen as a methodical set of rules that prescribes a single solution for every transaction. At Passion Revision, accounting is understood as a regulated space for shaping outcomes, in which I translate your business vision into meaningful financial statements. As a bridge-builder between HGB and Swiss CO, I help you harmonise your reporting in both jurisdictions.
This article is for general information only and does not replace advice on individual cases.