{"id":4354,"date":"2012-07-09T19:20:51","date_gmt":"2012-07-09T19:20:51","guid":{"rendered":"https:\/\/millercanfield.pl\/?p=4354"},"modified":"2025-04-14T18:04:01","modified_gmt":"2025-04-14T18:04:01","slug":"assignment-of-receivables-below-nominal-price-tax-considerations","status":"publish","type":"post","link":"https:\/\/millercanfield.pl\/en\/assignment-of-receivables-below-nominal-price-tax-considerations\/","title":{"rendered":"ASSIGNMENT OF RECEIVABLES BELOW NOMINAL PRICE \u2013 – TAX CONSIDERATIONS"},"content":{"rendered":"\t\t
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In its Resolution of 19 March 2012 (I FPS 5\/11), the Supreme Administrative Court (\u201cSAC\u201d) composed of seven judges held that under the provisions of the Act on Tax on Goods and Services it is possible to make the following statement: Acquisition of a money receivable (which must be stressed, at one\u2019s own risk) for the purposes of recovery in one\u2019s own name and on one\u2019s own account is not a service provided against consideration within the meaning of Article 5(1)(1) in conjunction with Article 8(1) [of the Act on Tax on Goods and Services of 11 March 2004 (\u201cVAT Tax\u201d)] if the difference between the nominal value of such receivables and their selling price reflects the actual economic value of such receivables at the time of sale.<\/p>

As further pointed out by SAC: the fundamental and necessary prerequisite for a transaction to be treated as a service provided against consideration, that is a taxable transaction, is the presence of consideration directly relating to such transaction, actually received (or payable), as mutual performance for the service provided.<\/p>

The findings of the above ruling are driven by the decision of the Court of Justice of the European Union of 11 October 2011 rendered in case no. C- 93\/10 and by the binding nature of the interpretation of the EU regulations presented in it, which regulations in the case under review coincided with the provisions of national law.<\/p>

SAC pointed out that a transaction of purchase, at one\u2019s own risk, of a non-performing receivable, at a price below its nominal value could not be treated as a service provided by the purchaser of the receivable exempt from tax on goods and services (VAT). In that particular situation the service provider did not undertake to recover debt against consideration. The key considerations in determining whether a transaction could be at all treated as a service provided against consideration within the meaning of Article 5(1)(1) in conjunction with Article 8(1) of the VAT Act included: firstly, actual payment of the price or other consideration and, secondly, the existence of a direct connection between the consideration received and the service provided.<\/p>

SAC subscribed to the view that pursuant to Article 509 \u00a7 1 of the Civil Code relating to the assignment of receivables, the purchase of a money receivable was effected in the purchaser\u2019s own name and on his\/her own account, such purchaser entering in the place of the creditor, and what subsequently happened to the receivable, e.g. its recovery, was beyond the scope of the transaction. Recovery by a party of its own receivables, on its own account, is a natural component of business dealings.
Consequently, such transaction cannot be treated as provision of a service, as there is no party to which the service would be provided, and at the same time there is no agreement for provision of the service against consideration. Therefore, the purchase of a money receivable is not a \u201cdebt recovery\u201d service exempt from tax on goods and services (VAT).<\/p>

Thus, SAC held that in the case before it, there had been no provision of a service constituting a transaction subject to VAT, and so there could be no exemption of such transaction from VAT. The SAC Resolution under review can without doubt affect the currently prevailing interpretation and case-law and make receivable purchase transactions subject to transfer tax.<\/p>

SAC indicated that examination of a specific transaction should involve looking for such potential direct consideration that the purchaser\/assignee would seek as mutual performance for a potential service provided to the seller\/assignor. SAC clearly stated that if a receivable sale transaction does not involve provision of a service by the purchaser of the receivable to its seller against direct consideration received by the purchaser, no provision of a service against consideration takes place and consequently no transaction of purchase at one\u2019s own risk of a non-performing receivable below its nominal value can be treated as a service provided by the purchaser of the receivable within the meaning of Article 5(1)(1) of the VAT Act.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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\n\n\t\t\t\n\t\t\t\t\t\t\u00a9 Miller, Canfield, W. Babicki, A. Che\u0142chowski i Wsp\u00f3lnicy Sp. k.<\/span>\n\t\t\t\n\t\t\t\t\t\t