The True Reasons The Financial Agent For Best factoring

Under a financing contract for the assignment of a monetary claim, one party (the financial agent) transfers money to the other party (the client) to the customer’s monetary claim against a third party (the buyer) arising from the provision of goods to a third party by the client, and the client concedes to the financial agent (factoring company) is a monetary claim.

According to Article 128 of the Civil Code of the federation, the right of claim is part of the organization’s property. The sale of an assignment of a claim is recorded in the accounting records as a retirement of other assets. Proceeds from the sale of other assets other than cash are included in other income. The factoring companies are perfect in this matter.

The supplier’s costs associated with the fee for factoring services rendered to the factoring company are transaction costs. Factoring in accounting is reflected as shown in the table below. Example of accounting from the supplier is there.

Income Taxes

When concluding a factoring contract, as a rule, “Factor” is paid:

  • commission for processing documents,
  • commission for payment of financing,
  • commission for factoring services,
  • in case of late payment by the debtor – insurance of the risk of late payment.

The cost of financial agent services can be expressed in absolute terms or as a percentage.

This commission is recognized as non-operating expenses (on the basis of sub-clause 15 of clause 1 of Article 265 of the Tax Code of the Russian Federation), if the receivable arises from non-sale transactions.With respect to commission fees established as a percentage of the amount of the assigned monetary claim or the amount of financing, the tax code does not establish the norms for recording expenditures.In this regard, in practice, there are two positions on the question of accounting for such costs:

  1. According to sub. 25 p. 1 tbsp. 264 of the Tax Code of the Russian Federation as part of other expenses related to production and sales (non-standardized expenses).
  2. According to sub. 2 p. 1 of Art. 265 of the Tax Code as non-operating expenses, as part of expenses in the form of interest on debt obligations of any kind, taking into account the specifics specified in Article 269 of the Tax Code (standardized costs).

Value added tax

2.1. Tax base

The tax base for value-added tax on sales of goods and services, the monetary claims for which are assigned by the client to the “Factor”, is determined in accordance with the generally established procedure, i.e., as the value of these goods, calculated on the basis of prices determined in accordance with Article 40 of the Tax Code RF, taking into account excise taxes (for excisable goods) and excluding value-added tax in them.

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