Transferring a company receivable to an individual: opportunity or poisoned chalice?

October 2026 · By Maître Louis LAZARD

Any company may assign its receivables to a third party, whether an executive, a shareholder or another company.

However, where the assignment is made for no consideration or for a manifestly token price, it may amount to a breach of the company’s corporate interest.

The tax authorities may then treat such a transaction as an abnormal management decision (acte anormal de gestion).

The ruling

An assignment of receivables must be recorded in writing, failing which it is void.

For the assignment to be enforceable against the debtor, the debtor must be formally notified, in particular by bailiff’s notice or registered letter with acknowledgement of receipt, so that it performs its obligation towards the assignee rather than the assignor.

The transaction must be justified by the company’s corporate interest and not by the beneficiary’s personal interest; otherwise, it risks being classified as an abnormal management decision.

Reminder

If, during a tax audit, the tax authorities identify a hidden benefit, the penalties are heavy:

For the company: the amount of the receivable is added back to taxable profit (corporate income tax), often with a 40% penalty.

For the assignee: the benefit is reclassified as distributed income. It is then subject to the flat tax (Prélèvement Forfaitaire Unique, PFU) of around 30%, with the tax base increased by 25%.

Key takeaways

• ✓The debtor’s consent is not required for the assignment to take place, but informing the debtor is crucial so that it can validly discharge its debt.
• ✓Any assignment of receivables must provide genuine consideration for the company.
• ✓Any assignment that breaches this requirement may be reclassified by the tax authorities.
• ✓Formalities are crucial: a written document and notification of the debtor are required.

This article provides general information and does not constitute personalised legal advice.