For over 10 years, Leaseurope was a leading participant in the global debate that eventually led to the new lease accounting standard, namely IFRS 16, which has been implemented by listed companies since 2019.

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Leaseurope's contribution to lease accounting

Leaseurope helped to ensure that the new rules would be practical and produce meaningful information for users of lessees’ accounts, engaging actively with the IASB and the European Financial Reporting Advisory Group (EFRAG). This was not a foregone conclusion, as many initial proposals would have created significant issues. The Chair of the Leaseurope Accounting and Taxation Committee was a member of the Lease Accounting Working Group, a joint group of the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board.

Even after so many years, lease accounting reform remains in its infancy. International accounting standards are only applied to large listed companies, which form a small minority in Europe. Leaseurope’s view is that IFRS 16 was designed for large leases - often for property - by large companies. Although changes to international accounting standards are often copied into national GAAP rules, caution is now needed before it is assumed that similar rules will work for the vast majority of European companies, particularly small and medium-sized businesses.

The IASB is currently reviewing the international accounting standard applied to SMEs. Leaseurope has noted that no analysis has been completed regarding the potential impact of applying IFRS 16 rules to SMEs that use national accounting standards. We are calling for thorough independent analysis of the costs and benefits before any decisions are taken in this regard.

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Key priorities

IFRS 16 implementation: Leaseurope provides resources through its member associations to assist lessees using international accounting standards to implement the new rules

National accounting rules: Leaseurope supports the work of its member associations who are discussing with national standard setters any possible future changes to local accounting rules following IFRS 16

Other tax and accounting matters: Leaseurope monitors related changes and impacts to other accounting rules, together with both direct and indirect taxation, to identify common issues across Europe and share information and guidance

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Key resources

Leaseurope developed a host of materials to assist lessors, lessees and our members to navigate the new IFRS 16 environment. These include the following:

  • IFRS 16 infographic
  • Understanding IFRS 16: A flowchart guide
  • Guidance for lessors on data to provide to help European firms adopting IFRS 16
  • Leaseurope tips for firms in Europe adopting IFRS 16 when accounting for their equipment and vehicle leases

These resources are available through member associations.