Hypo Immobilien & Leasing: Dealbreaker Sale And Lease Back For Swiss Cable Car Company

Leasing financing of cable car projects is an important part of the financing mix of successful cable car companies in Switzerland. But when is the right time to clarify leasing financing when investing in a new cable car? For tax and legal reasons, it should be before construction begins.

In this article, we will get to the bottom of the details and background on the topic of momentum in cable car leasing - more on that in a moment. But why does it make sense to lease a cable car? The financing mix already mentioned is often the focus. The electromechanical part of a cable car is suitable for leasing. This usually consists of technology, drive, driving equipment, rope, supports and, if necessary, station covers. All construction measures such as foundations, mountain and valley stations, planning costs and dismantling of a system to be replaced can be handled using existing bank lines and loans. This sometimes saves collateral and credit lines.

Why should leasing financing be clarified in the planning or project phase?

Essentially, the transaction must not be of the nature of a sale and lease back, i.e. the transfer of ownership must be made directly from the supplier to the lessor. The cash flows should also flow from the lessor to the supplier.

According to Swiss law, a sale and lease back fails for movable objects for the following reasons:

The courts assume that the transfer of ownership to the leasing company only serves security purposes and that the leased object must therefore be treated as a security deposit.

The Swiss Civil Code (ZGB) stipulates that the pledged item must pass into the possession of the pledgee and may not remain with the pledgee, otherwise the transfer of ownership is ineffective vis-à-vis third parties. In order not to violate the right of lien, the leased item must therefore be located with the leasing company during the leasing period, which contradicts the contractual purpose of the leasing and the transfer of use.

There is a risk that the transaction will be classified as a disguised financing transaction, which may give rise to significant VAT liabilities.

"Leasing is an attractive option for financing cable cars in Switzerland, particularly due to the flexibility and liquidity it offers. The right time to clarify financing is therefore in the early planning phase. Include us in your planning. We will be happy to support your project with our expertise and commitment."