[12] Financial expenses

Financial expenses break down as follows: > TABLE 064

In 2018, financial expenses fell by €31.9 million year on year. Interest expense from loans decreased due to the corporate actions carried out in 2017, whereas the interest expense from promissory notes increased. At the time of the early repayment of certain financial liabilities (see also note [29]), deferred borrowing costs of €1.9 million (2017: €3.5 million) were reclassified as financial expenses and thus taken to profit or loss.

The exchange rate losses included in foreign currency exchange rate losses (financing) decreased, as was the case for exchange rate gains included in foreign currency exchange rate gains (financing) (see note [11]).

The interest expenses from leases predominantly relates to liabilities under sale and leaseback sub-lease transactions for the leasing business and for financing the short-term rental fleet. Sale and leaseback sub-lease transactions entered into in connection with the leasing business incurred interest expenses of €14.1 million (2017: €27.3 million). The income from corresponding customer agreements is a component of the rental and lease payments received and is therefore reported within revenue rather than as interest income.

The interest expenses from leases also contains further interest expense attributable to liabilities from financial services in an amount of €13.0 million (2017: €0.3 million). This includes interest expense on sale and leaseback sub-lease transactions of €4.2 million (2017: €0.0 million). The income from corresponding customer agreements is a component of the rental and lease payments received and is therefore reported within revenue rather than as interest income.

Net interest expense from defined benefit plans relates to the net interest cost on the net defined benefit liability applying the discount rate for plans in which pension obligations exceed plan assets.