The issue of properly identifying tax consequences brought about by the sale of an entity’s own receivables (especially under factoring arrangements) has long given rise to many doubts among taxpayers, especially in terms of proper calculation of tax-deductible costs in income tax.

Unfortunately, the doubts have not been dispelled by the amended Article 16.1 (39) of the CIT Act, effective as of 1 January 2018, pursuant to which: [expenditures incurred on] losses arising from the disposal of receivables against payment, including in the manner specified in Article 12.1 (7), except for receivables or part thereof that were previously recorded as revenue receivable - up to the amount that was previously recorded as revenue receivable are not tax-deductible expenses (an analogous provision can be found in the Polish PIT Act). Instead, a view has emerged among some tax authorities, according to which the possibility of recognizing tax-deductible costs on the sale of receivables is limited only to the net value thereof, because this constitutes the amount of revenue receivable to which Article 16.1 (39) of the CIT Act refers.

It should be also noted that another line of interpretation (finding its source in PIT provisions) has also evolved, nourished by the Head of the National Revenue Administration (NRA). In individual rulings issued by the Head of NRA it has been clearly stated that the sellers may recognize tax-deductible costs only when they incurred a loss on transactions consisting in assignment of their own receivables. Thus, selling receivables at 100% of their gross value would result in the sellers’ inability to recognize tax-deductible costs.

The many doubts raised by taxpayers and the persisting interpretation inconsistency were finally addressed in a general ruling issued on 15 February 2021 by the Minister of Finance, Development Funds and Regional Policy (case file DD5.8201.11.2020). The ruling applies directly to situations where a taxpayer (seller) assigns (sells) their “own receivables”, i.e. receivables resulting from the sale of goods or services, in relation to which a revenue receivable under Article 12.3 of the CIT Act was reported, to a different entity (the factor), under a factoring transaction.

Tax-deductible costs

Pursuant to the general ruling, a seller assigning a receivable to a factor at 100% of its gross value may recognize the gross value of the receivable sold, i.e. including VAT, as tax-deductible costs.

According to the Ministry of Finance, this is backed directly by Article 15.1 of the CIT Act and, consequently, draws form general taxation rules, pursuant to which all expenditure may be potentially qualified as tax-deductible costs. Furthermore, Article 16.1 (39) of the CIT Act does not prohibit qualifying part of the receivables sold (in the amount of VAT due ) as tax-deductible costs (otherwise this provision would take over the role of Article 15.1 of the CIT Act, which should be considered inappropriate), but only indicates which part of the receivable sold (but in its gross amount) is excluded from tax-deductible costs. In practice, pursuant to the general ruling, provisions of Article 16.1 (39) of the CIT Act would impact the possibility of deduction only if the loss incurred in the assignment transaction would turn out to be excessive (i.e. would exceed the revenue receivable).

Consequently, pursuant to the ruling, when determining the tax-deductible costs in the assignment transaction, the following steps should be taken:

1)    it should be determined whether and in what amount the cost was incurred, in terms of Article 15.1. As a rule, it is the nominal gross value of the receivable sold,

2)    it should be verified if the assignment transaction generated a loss,

3)    if a loss was not incurred, the cost borne constitutes tax-deductible cost in full,

4)    if a loss was incurred, but the receivables assigned would be kept as revenue receivable, the ratio of the loss and to the revenue receivable should be calculated,

5)    if the loss exceeds the revenue, the surplus should be deducted from the cost incurred and only this reduced amount constitutes tax-deductible cost,

6)    if the loss is lower than or equal to the revenue, the cost incurred constitutes tax-deductible cost in full.

Factor’s remuneration

Notwithstanding the above, the Minister announced that a taxpayer (seller of the receivables) may recognize the fee paid to the factor for the performance of the factoring service, including the remuneration deducted by the factor from the amount of the receivable paid to the seller for the receivables assigned, as tax-deductible costs.


The general ruling discussed in this article does not cover all possible instances of assigning own receivables to the factor. “Special kinds of own accounts receivable” (e.g. bad debt, outdated receivables, credit or loan receivables, bond or interest receivables) are outside the scope of the ruling, which means that any transaction involving assignment of such receivables should be preceded by a thorough legal and tax analysis.


Undoubtedly, the new ruling should be assessed positively and seen as a step in the right direction. Nevertheless, given the limitations discussed above, it marks only the beginning of a long road to dispelling all doubts as to the taxation of sale (assignment) of receivables under factoring arrangements.

Moreover, it should be noted that general rulings do not have retroactive effect. Thus, there are doubts as to whether the tax authorities will be willing to apply the conclusions presented in the general ruling discussed also to past settlements. Moreover, it is worth re-examining past transactions and verify whether the argumentation behind the ruling may be applied in the event of potential corrections.


Marcin Zimmermann, Manager, Tax FS Department, KPMG in Poland

Tomasz Kądrzycki, Supervisor, Tax FS Department, KPMG in Poland