Cross - Border Leasing ( CBL) is a lease in which the lessor and the lessee are domiciled in different states. Usually CBL is used to exploit a different legislation in two countries, thereby saving taxes or avoid. In a broader sense, any leasing business across state lines CBL, even if it is from a normal leasing de facto no different. CBL was developed in the USA and come so far in Germany, Great Britain, Japan, Sweden, and Austria on the application.

  • 2.1 Objects, contract practice and contract types
  • 2.2 times and costs
  • 2.3 Jurisdiction USA
  • 2.4 Yields and costs
  • 3.1 USA: The Rise and Fall
  • 3.2 Criminal viewing
  • 4.1 Germany
  • 4.2 Austria
  • 4.3 Switzerland


Basic definition

CBL is a special form of leasing a structured financing. There are various contracts that are completed together as part of an overall plan and can only be understood as a whole. It is known in particular the CBL with the U.S.. Their tax rules make it possible to treat long term rent as property. The contracts are concluded in New York, because in this state contracts will still exist if it turns out in retrospect that they violate U.S. law.

Tax law

In many countries regulate tax legislation whom is attributed to a leased asset. From this allocation depends on who must activate the object in its balance sheet and then reduce by depreciation and amortization profit. Through this scheme, there comes sometimes to different property tax allocation pursuant to law and civil law. Depending on the contract design can be a leased asset to the lessor or the lessee be attributed. In Germany, for attributing relevant following:

  • In any case: Proportion of the basic lease on the entire useful life of the case
  • If you buy option determines the ratio of the remaining purchase price and book value of the linear matter
  • When to renew the lease determines the ratio of subsequent rent and straight-line depreciation of the matter
  • Items specifically for the lessee made ​​or adapted to their ratios are always capitalized by the lessee.

For details, rules decrees which were published in the Federal Tax Gazette.

In Germany you can activate an object of the lessee if lease period is less than 40 % or more than 90 % of the depreciation ( and the lease no option appends ). In other countries, this may be regulated differently so that there also the lessor may activate the thing.

Especially the rules on special items seems suitable to create contractual structures with activation on both sides.


Due to the different fiscal regulations of the countries it comes to fiction of two tax owner of one and the same object, which is now both - each according to the laws of their home country - simultaneously write to the same object for tax purposes. Both " tenant " and " landlord " can therefore write off tax the leased asset in this structure and thereby generate tax -deductible expense. Since the American side, the depreciation can claim no real cost, it is a pure tax shelter. Part of the tax savings shares the American side to the lessee. These are often cities and towns in Germany, France, Austria, Switzerland, Belgium and the Netherlands. The municipality receives a maximum of two to eight percent of the total transaction volume, the so-called " net present value ".

Many European communities could with the CBL - for now - to supplement their budgets. About 150 German cities, as many as in any other country of the European Union which have cross- border leasing transactions completed; estimates of the total volume of these transactions vary from 30 to 80 billion euros. It is expected that the German cities between 1995 and 2004 were able to achieve a total net present value of around one billion euros. 2004, new contracts were no longer tax recognized in the USA. In 2005, the American tax authorities have published opinions, which CBL is considered to be abusive tax avoidance and the tax benefits also apply to the completed in the past CBL transactions are not granted.

Contract contents

Objects, contract practice and contract types

Currently, a minimum value of EUR 150 million is provided in the rule. The type of contract was until 1999 mainly "lease to lease out ", then only the type of contract "lease and service contract ". In the former, for example trams were sold and leased back, the second public infrastructure is leased to 100 years, and simultaneously leased back for a shorter period ( 24-30 years).

In practice, municipal sewage treatment plants, sewer systems, heating plants, drinking water systems, trams and subways, railways, exhibition halls and schools are leased to U.S. companies over a period of up to 100 years and immediately leased back. The American investor pays for the entire rental period, the rent in an amount ahead. This is true in the U.S. as an "investment " and allows depreciation.

The community rents back the plant for a much shorter duration and given the opportunity to buy again after expiration of the lease the facility back. The rent for the entire term plus surrender value represents the community from the obtained from the American investor prepaid rent a bank. These are paid to them the current rent to the American investor and after the rental period the cash surrender value. The advantage of the community lies in the difference between payments received and prepaid rent paid advance rental payments, including cash surrender value. It can therefore be seen as a special form of sale- leaseback financing ( for municipalities), which makes it possible to convert existing assets into working capital without having to give up the use of the thing. For municipalities, the payoff for the short to medium-term restructuring their budgets represents the only meaning

The U.S. company is called "investor". The term "investor " is used colloquially. It is technical terminology to a trust, which is actually not invested in the objects, but takes advantage of the tax law in the United States. Under German law, the U.S. company is only tenant and landlord at the same time. New investments in the facility during the term does not have to make the U.S. company, but the municipality must ensure that the system meets its contractual purpose over the whole period. The U.S. "investor" for its part, has his tax office provide an annual confirmation that the equipment is intact. This is problematic due to the long contract periods.

The former owner now has numerous long-term assets and receivables which are secured by a lien: according to the American tax law extends the " beneficial ownership " of. So there are two owners, resulting in a certain risk of loss. After the German interpretation of contracts, the municipality remains the owner and under U.S. law the U.S. trust becomes the beneficial owner. In all contracts, the United States is defined as the place of jurisdiction. However, it is not practiced regularly, the extensive often more than 1,000 pages of contracts to be translated into German or to inform the public or councilors about details.

Times and costs

A disadvantage of the long lead times apply. These are not so much the hundred years of rent, but the long -leaseback of up to 30 years. During this period, all agreed in the contract bonds and restrictions must be adhered to. Firstly, the equipment must not be reduced or downsized, so they may not particularly be cheaper. Secondly, all the activated banks must continue to exist and retain the prescribed rating. All subsequent changes to the detriment of communities and these bear all associated risks.

In some negotiations, the communities have borne the entire cost risk if it actually comes to a conclusion of the CBL. If they wanted to get out prior to closing, so they had to pay all the bills. So had to after the failure of preliminary negotiations the city of Aachen to banks, law firms and other advisers 19 million Mark pay. However, in many cases, the local authorities had no financial risk. If it did not come to the conclusion of the CBL, had all lawyers bear their own costs or these were taken over by the banks.

Jurisdiction USA

Contracts are concluded to New York City law to the jurisdiction of New York. The New York law is particularly suitable, as in New York, the big American law firms have their headquarters and is known whose contract law and proven. A fiscal prohibition of agreements can the civil recognition to New York Law exist.

For any questions concerning the rights and obligations of the lessee, however, American lawyers must turn. In case of dispute with the American side, the municipality has the great disadvantage that they would sue in their courts. A foreign municipality, the charge with a tax-saving model is hardly enjoy special protection in U.S. courts. The question is whether the municipality could argue that the agreements are invalid under the law, since the effective consent of the supervisory authority does not exist.

In the fiscal question of whether the concrete CBL- contract in the U.S. is recognized for tax purposes and who is to blame and thus all the consequences for non-recognition, only the U.S. financial authorities and tax courts shall also have jurisdiction. The municipality is not involved and has no intervention to the extent possible.

Returns and costs

The returns from the CBL not arise based on specific value, but by the loss of the U.S. Treasury and are funded by the local tax payer. German banks can reduce "investment" their tax burden in Germany due to this foreign. You can also earn the given credit.

The tax savings of financial investors was a year about 8 to 10% of the transaction volume, with a maturity of 30 years makes it a total of 300 % (see Rügemer 2005, p 20).

The so-called transaction costs of cross- border leasing transactions amounted to about 10 % of the transaction. Of this, about 4% of the present value of benefit to the cities and a total of 6 % ​​as fees. Against the loan and debt assumption banks to which Einwerber the application fees and the lawyers With a transaction volume of 300 million euros, for example, the city of 12 million, 12 million, the banks and the lawyers would get 6 million euros.

The costs incurred inter alia by way of fees for the participating law firms or commissions for brokers, therefore are generally higher than the amount of the total falls for the involved community in Europe as an advantage (see Rügemer 2005, p 69 ).


Originally produced during CBL value benefit was seen as compensation performance without consideration. The leased assets remain in Germany are, can and must continue to be operated and would need to be replaced even without previous CBL at a loss case. Accordingly led each value advantage, be it in relation to the value of the leased asset rather low, mean that CBL is advantageous.

Meanwhile, this view has changed. It is recognized that the CBL agreements restrict the local authorities through a variety of restrictions and authorization requirements and therefore are contracts from an economic perspective a significant burden. Then there are the risks that municipalities are liable for damages for breach of contract actions, and other charges by future withholding taxes, other taxes and other costs. Local authorities often lack specialists who understand the extensive, subtle, English- CBL agreements. In order not to violate the contractual obligations, a very comprehensive contract control is set up. This requires the use of external experts, which are very expensive. Furthermore, the municipalities are obliged during the entire term of the contracts to monitor the credit risk that banks and insurance companies, to hedge the CBL transactions. Decreases their rating, the cities have to negotiate with the lawyers in the U.S. and find within 90 days of new banks and insurance companies that have a sufficient rating. If they succeed not, the business must if necessary be reversed, which can bring losses in the millions with it for the municipalities. Such follow-up costs were often not taken into account in contracting and displaced culpable intent in decisions taken.

From the perspective of the citizen must be remembered that the net present value will be passed mostly not directly by the municipalities. This also applies to toll- financed sewage and waste incinerators. Whether this practice is lawful, shall be examined by the courts. Have become known administration actions in Hamburg, Cologne and Wuppertal.

In addition, the transparency and democratic deficit in the implementation of CBL. The city councils get only so-called " transaction descriptions " of the involved attorneys. The local political intervention is evaluated by globalization critics as extremely high and similar far-reaching consequences as the GATS agreements. Also in the CSU was discussed banning the CBL agreements, for the former Interior Minister Stein are CBL transactions " on the border to legality. "

The cities believed at least in the contract that it is a pure sham contract to which you no longer have to worry after signature. The stuck in the thick contractual risks show up until later. Spread over 30 years, the present value benefit is often not much higher than the annual administrative costs.

U.S.: The Rise and Fall

CBL has been rejected in the United States by the tax authorities. Originally, this design was intended to finance the Boeing aircraft sales and not to the advantage of European lessee. So CBL structures were always limited. In 1999, the CBL were declared in the form of lease- in -lease- out ( LILO) to be inadmissible. However, the result was not the abolition of CBL but the change to the service contract structure. The conducted from 1999 CBL transactions are tax more aggressively structured, and because the benefit was not as large, the transaction sizes have been expanded.

In the course of the Iraq War, the U.S. criticized that France and Germany to lock against the Iraq war, but let finance its own infrastructure by the American taxpayer. Spokesman was particularly Senator Chuck Grassley of Iowa, who called for an immediate and retroactive ban of CBL to Europe. Also in the American press the CBL structures were represented as sham transactions without economic substance. In the " American Jobs Creation Act of 2004" are CBL agreements that are newly completed after March 12, 2004 prohibited.

In 2005, the American tax authorities (IRS ) has determined that the existing lease transactions are in principle be regarded as abusive tax avoidance. This is thus - unlike the law was changed in 2004 - especially for all existing contracts. The target with the transaction tax benefit is therefore not accessible.

It is feared that the American Contract page will attempt to provide the background possibly broken away tax benefits to find a breach of contract on the part of the foreign partner to force the cancellation of the contract. The Bavarian Ministry of the Interior had loud taz warned by November 13, 2004 before that would probably result. Currently get German city treasurer, such as auditors Arnd Bühner confirmed by the firm Ernst & Young, a letter from the IRS that the leasing transactions are taken a closer look. The total number in Germany is estimated at 180 contracts from 1996 to 2003.

The lawyer Julian Roberts looks CBL as a lousy business to: " Local authorities were ill-advised to seek press on this high risk for such a small price. "

Criminal viewing

The contiguous with the issues of cross -border leasing criminal justice issues are still unclear. Examines the previous designs are primarily from the point of infidelity ( § 266 StGB), committed by the state and local decision-makers who are responsible for those contracts.

Case Studies


Mid-2011 was announced by the city that one of the CBL transactions of the LVB was ( ... with respect to the rail networks ... ) finished in the amount of 722 million U.S. dollars prematurely. The end of 2011 published LVB that all CBL agreements LVB had been terminated by mutual agreement


In Austria the work carried out up to 2004 CBL transactions by estimating the Kommunalkredit that handles such transactions, a volume of about twenty billion euros have achieved. The Court went out of around 18 billion.

Contractual items are / were most parts of the country and city infrastructure, but also real estate and facilities of private and government-related businesses:

  • Austro Control: air traffic control systems
  • BEWAG: power grid
  • BEGAS: gas network
  • Connect Austria: transmission systems
  • Energie AG Upper Austria: power supply, hydroelectric power stations
  • IMMoFinAnZ: Office building Wienerbergstraße
  • Innsbruck Kommunalbetriebe AG: sewage treatment plants and channels
  • Linz AG: District heating plant, district heating and electricity network
  • Austrian Federal Railways: Railway stations, locomotives, wagons, signal systems
  • Post: mail sorting in Inzersdorf, Graz, Salzburg and Innsbruck (CBL over 119 million euros )
  • Telekom and Mobilkom Austria - various transmission systems ( 1998: $ 200 million, 1999: $ 400 million, 1999: $ 200 million, 1999: $ 190 million )
  • TIWAG: Hydroelectric power stations
  • Composite: 8 Austrian Danube power plants ( without transfer of ownership, lease-and -lease-back )
  • Wiener Linien: subway and tram network
  • City of Vienna: city sewer in the 21st and 22nd district (CBL over 500 million euro and 35 years to 2037 )

The cross-border leasing transactions were viewed critically in some reports of the Court, particularly in view of the risks and usage restrictions. Meanwhile, those contracts were also dissolved.


  • In Zurich (water supply, EWZ, VBZ and SZU ) consist CBL agreements over assets of CHF 1563 million estimated well. With the successful resolution of lease transactions for VBZ rolling stock in the investment value of 357 incurred costs of CHF 3.8 million. The total income decreased from 24.4 million to 22 million francs still.