Summary

The current Estonian legislation regulating leasing contains numerous inconsistencies with regard to accounting and income tax provisions. Taxation and accounting are regulated by different legislation that sometimes provides conflicting definitions.
In the author’s opinion, the definition of capital lease in the Estonian law is outdated. Further, under the existing legislation, the definition of commercial lease is too broad and has therefore created legal possibilities for tax evasion.
The author provides an overview of legislation regulating leasing in advanced industrial countries. He comes to the conclusion that ownership rules which equate the possessor of leased property with the owner would help Estonia to resolve problems concerning leasing.