1. Leasing in Romania: the existing legal framework Sebastian Lawson - Foia November 2003

2. 1 Existing legal framework Government Ordinance 51/1997 Other relevant acts include Profit Tax Law and Law 15/1997 on depreciation. Legal definition –transmission of right of use over a good –in exchange for a regular payment –for defined period –lessee’s option at end of term Restrictions on lessors/leased goods/term

3. 2 Finance or operating lease? risks and rewards of ownership pass moment contract is entered into the contract expressly provides that right of ownership will pass at end of term lessee has option to purchase for no more than 50% of market price at time of exercise term is for at least 75% of the good’s useful life

4. 3 Contractual implications Rights in relation to supplier –Lessee may take action directly Rights in relation to third parties –Lessee may take action directly –Lessor has no responsibility

5. 4 Contractual implications Rights in relation to each other –Obligations of lessee Follow supplier’s instructions and train staff Not to encumber the good without consent Not to modify the good without consent Support all obligations arising from the use of the good –Obligations of lessor Quiet enjoyment Insurance

6. 5 3rd PartiesLessorSupplier Lessee

7. 6 Security Right of ownership –executory title Bankruptcy remote Rights of rescission Registration at land registry Sale of leased good

8. 7 Cross-border leases: withholding tax How is lease characterised? How are lease payments characterised? Domestic rates of withholding tax Treaty provisions –reduced rates –business profits definition