Cession Meaning — Assignment of Receivables, Examples & VAT
Cession is a legal act by which a creditor (assignor) transfers their receivable to a third party (assignee). The debtor (cessus) after transfer owes the new creditor.
Definition
Cession is a legal act by which a creditor (assignor) transfers their receivable to a third party (assignee). The debtor (cessus) after transfer owes the new creditor.
Details
Requirements: written cession agreement + debtor notification. The receivable transfers with all ancillary rights (interest, guarantees). No VAT effect - it's a receivable transfer, not a new sale. Often used when you have an overdue receivable but the debtor owes another company.
Example
Company A owes you 200K. Company B owes you 150K. Via cession - you transfer the 200K receivable from A to B. Now A owes B, and B owes you less.