Dear Clients:
In order to keep you informed and updated on legal issues and matters of national interest, we inform you that on February 10, 2021, with 101 votes in favor the Congress of the Republic approved Decree 2-2021 on the Leasing Law. This law regulates leasing contracts with purchase option for movable and immovable property.
The purpose of the law is to promote investment and establish mechanisms for access to credit, especially for small and medium-sized companies. Currently in Guatemala there is no regulation that establishes guidelines for leasing or leasing with option to purchase activities.
For the purposes of the law and its application, the following shall be understood as:
Financial Leasing Contract, financial leasing or financial leasing with option to purchase, the contract by which a person, autonomous patrimony or entity, called lessor, acquires according to the request and specifications given by the lessee and, for the account and interest of the latter, certain goods, which it delivers the lease title for a determined term and receives in exchange, the right to pay a rent or installment, granting the lessee, at the expiration of the term of the contract, the option to coordinate the contract under new conditions or acquire the goods object of the lease contract for a previously established amount or residual value. Unlike the Operating Leasing Contract or Operating Lease, it is the contract that delivers in lease, for an established term, certain goods that have been acquired, with the purpose that the lessee uses them during such term, in which the contract may not be terminated before the expiration of the agreed term, unless otherwise agreed; in this contract the title of the goods will not be delivered and there will be no purchase option to acquire the goods object of the contract.
The law will also regulate the following contracts:
Housing or Housing Financial Leasing Contract, Housing or Housing Financial Leasing or Housing Financial Leasing or Housing Financial Leasing with Option to Purchase.
Housing or Social Interest Housing Financial Leasing Contract, Housing or Social Interest Housing Financial Leasing Contract or Housing or Social Interest Housing Financial Leasing Contract with Option to Purchase.
Real Estate Financial Leasing Contract, Real Estate Financial Leasing or Real Estate Financial Leasing with Option to Purchase.
The formalization in accordance with the law, being a commercial contract, must be in writing, and must be made through a public deed for the purposes of its registration in the Property Registry. When the contract is for a forced term, the lessee assumes the obligation to pay the installments or rent established in the contract.
The regulations establish that any leasing contract in which a purchase option is agreed must be made through a residual value to be paid, in which the lessee may exercise this right and acquire the good, under the terms and conditions agreed or subscribed. In the case of leasing of real estate, the residual value is the value in respect of which the tax on the sale is paid.
The persons, estates or entities that carry out leasing operations may finance such operations with resources coming from their own capital, by means of credits, by means of a public stock exchange offer or by any other means or source allowed by law.
The value of the rents or lease payments agreed in the contract and invoiced by the lessor, are recorded by the lessee as a deductible expense of its gross income for the calculation of the Income Tax (ISR) of the corresponding fiscal period, during the term of the contract. As a consequence of a leasing contract, interest, price differentials, factoring and other financial charges are recorded by the lessor as regular income and by the lessee as deductible expenses, under items different from the agreed leasing rent or installment.
This Decree will enter into force three months after its publication in the Official Gazette. If you have any questions or would like further information, please contact us at alopez@latinalliance.co.