Objectives
and Advantages Offered
Credit
assignment consists in an assignor company ceding its rights in
relation to a debtor to an assignee company.
Assignment allows profit-making companies to rid themselves of the assigned
credit at cost, obtaining a tax benefit in the current period.
Who
It's For
Administrative,
financial and fiscal areas of industrial, commercial and service
companies.
Types
of credits usually assigned
Pro-soluto
assignment is technically permitted in the following cases:
- BANKRUPTCY
- UNLOCATABLE
DEBTOR
- UNECONOMICAL
ELEMENTS
- CREDITS
OF MODEST SIZE
- CREDITS
TO FOREIGN PARTIES
or;
-
- Disappeared
or unfindable debtors.
- Cases – and
there are many – in which it is considered economically
unfeasible because too expensive to take legal action
with an uncertain outcome.
- Credits
of modest size usually divided among a large number of
debtors less than the "average invoice".
- Credits
regarding multiple protested bills.
- Contested
credits in which commercial policy advises against issuing
credit notes.
- Cases
in which one does not wish to break off relations with
the client definitively.
- Or
opposing cases, that is, when one does not wish to have
relations with "nasty" clients.
- Proposals
for composition that could spill over into the following
financial year.
- Debtors "near" bankruptcy,
for which it is expected that the date of the bankruptcy
decision will fall in the next financial year.
- Foreign
debtors. It is pointed out that Article 66 T.U. refers
to bankruptcy cases in accordance with Italian law. Therefore,
for credits in a foreign bankruptcy case or foreign unpaid
bills of exchange, given certain and precise proof is
necessary for the purposes of total or partial tax deductibility.
Proof that can be provided by divesting oneself of the
credit by means of pro-soluto assignment.
- Shares
of credit of uncompensatable insurance accidents (always
in relation to the conditions of the policy).
Compliance
and Legal References
Credits must be entered in balance sheets according to the presumable value
of realisation (Art. 2426, par. 8, Civil Code). Losses on credits are deductible
from income if they result from certain and precise elements and, in any case,
if the debtor is bankrupt (Art. 66, Presidential Decree 917/86). For the purposes
of deductibility of losses on credits, the debtor is considered bankrupt from
the date of the adjudication order or of the measure that orders compulsory
winding-up or of the decree of admission to the procedure of composition with
creditors or of the decree that orders the special management procedure for
large enterprises in crisis (Art. 11, Presidential Decree 42/88).
Losses on credits
are deductible limited to the part exceeding the amount of the
devaluations and provisions deducted in the preceding financial
periods, or the reserve fund for bad debts (Art. 71, Presidential
Decree 917/86).
The assignment
of credits is regulated by Art. 1260 and following of the Civil
Code and, to have fiscal validity, must be pro-soluto. In practise,
assignment occurs by means of an exchange of registered letters
without envelope, in order to have the certain date of sending
on the registered letter itself, or by means of a contract stipulated
between the parties, subject to a tax of 0.5% on the nominal
value of the assigned credits and registered in the fixed term
of 20 days at the Registry. In both cases the assignment, to
have legal effect, must be accepted by the assigned debtor or
be notified to him (Art. 1265 Civil Code).
How
to Use the Service
- Evaluation
of the credit in portfolio of the assignor company.
- Letter
of assignment.
- List
of debtors.
- Copy
of the probatory documentation relative to the credits.
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