The leasing sector has benefited from a number of important provisions in the last year or so, mainly regarding tax issues, which have improved the attractiveness of leasing as a means of business financing. The first such provision, introduced at the end of last year, concerns the exemption of real estate from transfer tax in sale and leaseback contracts. This has offered a boost to the sector and – at the same time – an option for businesses, irrespective of size, to obtain liquidity without having to sell fixed assets. To be sure, the practice of lease-back still has an outstanding issue to be settled, that of the 35 percent tax on capital gains on the properties involved in the leasing contracts – which makes contracts on old buildings unattractive. This is because differences between the acquisition value of a newly built property and the price at which the sale and leaseback contracts are signed are usually minimal; therefore, a firm that sells and leases a new property back is unlikely to make much profit and the impact of the 35 percent tax on capital gains is minimal. The opposite is the case for old properties, as the differences between acquisition and current (sale and leaseback) values are large and therefore companies investing through such schemes are usually burdened with the 35 percent tax on the capital gains realized. The issue prevents small and medium-sized firms in particular from using sale and leaseback as a means of securing liquidity, as it implies an important capital outflow. Although there have been no developments regarding the issue, Economy and Finance Minister Nikos Christodoulakis did refer to it in his speech at the general assembly of the Federation of Greek Industries (SEV) early this summer, expressing the government’s intention of abolishing the 35 percent tax. It is worth noting, however, that under the provisions in force, firms selling their property and leasing it back enter the resulting capital gain in their books as profit. A number of market participants take the view that, if the issue is settled favorably, this income could be booked in firms’ reserves. Another measure which made leasing more attractive, introduced at the end of June, was the abolition of the 3 percent tax on the gross revenue received from property leasing. The relevant circular argued that such revenue was not considered income proper, as leasing firms are not the perpetual owners of such properties and should not be liable to the tax. The abolition reduces total annual leasing costs by about 45 million euros, which is equal to the 3 percent of the total value of property leasing contracts, and offers an important boost to the industry. Firms that did book provisions for this year before the introduction of the measure will retain them, but these will refer to bad debts.