Deloitte conducted a study at the level of Central Europe on the tax treatment regarding the sale of receivables by financial institutions.
According to the Romanian legislation, in case of assignment of receivables performed by financial institutions, if the sale is made at a price below the nominal value (e.g. sale of non-performing loans), the loss is deductible within the threshold of 30% when computing the corporate income tax.
Given these provisions, we analyzed the existing regulations from 16 Central European countries (including Romania) for similar transactions, in order to identify any similarities or differences. The list of countries included in our analysis is presented in Annex 1.
The comparative study carried out by Deloitte consisted in the analysis and comparison of the tax treatment from the corporate income tax perspective in connection with the sale of receivables by financial institutions.
Further details regarding the gathering process of the data and the interpretation can be found in section “Assumptions and limitations”.
Following the analysis of the collected data on the tax treatment related to the sale of receivables, the following conclusions can be drawn regarding the losses incurred at the assignment moment. Thus, out of the 16 countries analyzed regarding the deductibility of losses, the following resulted:
- 11 countries allow the full deductibility of losses resulting at the level of financial institutions, following the sale of receivables held towards customers;
- 5 states have special conditions to ensure the deductibility of these losses (e.g. up to the level of the provision, or depending on the identity of the buyer).
Our analysis took into account exclusively the legislation in force at the date of the preparation of the study, and we have no responsibility to update it if events, circumstances, operations or any changes occur after this date.
In the event of a change in the existing applicable law or court interpretation, the conclusions expressed in this analysis will need to be reassessed in the light of the respective changes.
The tax provisions are described in general terms. Those tax considerations may be subject to change depending on how the legislation is applied in practice.
No other legal or tax implications regarding the sale of receivables were analyzed, the analysis being carried out strictly from a corporate income tax standpoint.
Our analysis does not constitute an opinion for regulatory purposes, nor does it assess other regulatory frameworks. This analysis should be read as an indicative material and it should not be interpreted as a basis for investment decisions or management decisions.
The reader agrees that neither Deloitte nor its partners and employees assume or accept any liability or responsibility, either contractually or by law (including, but not limited to, negligence or breach of any other responsibility), and nor they will be liable for any loss, damage or expense of any kind, caused by any use which the reader decides to give to this study, or resulting from the access to the study, the reader agreeing that this report may not be copied or reproduced, in whole or in part, in any public or legal document or convention without mentioning the source.
List of the countries included in the study:
- Albania
- Bosnia and Herzegovina
- Bulgaria
- Croatia
- Czech Republic
- Estonia
- Hungary
- Kosovo
- Latvia
- Lithuania
- Moldova
- Poland
- Romania
- Serbia
- Slovakia
- Slovenia
Contacts:
Alexandra Smedoiu
Partner, Tax Services, Deloitte Romania
Anca Ghizdavu
Senior Manager, Tax Services, Deloitte Romania
Cristina Borș
Manager, Tax Services, Deloitte Romania
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