How to optimise the cost of the transaction tax by offsetting receivables and payables

According to the latest information, the new financial transaction tax will take effect on 1 April 2025. In this article, we present a method of minimising this tax – offsetting receivables and payables. This approach can be very effective for entrepreneurs who want to optimise their tax obligations and reduce the costs associated with financial transactions.

Legal framework

Set-off of claims is governed by Sections 580 and 581 of the Civil Code. Section 580 sets out the basic rules: “If a creditor and a debtor have mutual claims whose performance is of the same kind, the claims are extinguished by set-off to the extent that they cover each other, if one of the parties makes a declaration to the other aimed at set-off. The claims are extinguished at the moment when claims capable of being set off met.”

Set-off is therefore a way of settling mutual obligations between two parties without the need to physically transfer funds. This solution is particularly useful where both parties are in the position of both creditor and debtor, and can therefore offset these obligations against each other.

Section 581 goes on to specify which claims cannot be set off, but it also states that, by agreement, claims that would otherwise not be eligible for set-off can be set off as well. This means that almost any receivables and payables can be offset, provided there is mutual consent. In practice, this is often used to reduce administrative costs and simplify the management of financial flows.

Types of set-off

A set-off can be carried out in several ways, depending on the number of participants and initiators:

1. Unilateral set-off

• Initiator: One initiator and two participants, both of whom act as both creditor and debtor.
• Document: The initiator draws up a document on the set-off of the receivable and the payable, which contains:
• • Identification of the participants (company name, address, identification number)
  • Identification of the mutual claims (invoice numbers, due dates, amounts)
  • A statement of the initiator’s intention to set off the claims

The most common example is offsetting an issued invoice against the related credit note. In practice, this may be a situation where a company issues an invoice for goods supplied and also issues a credit note for the goods in question (which have been returned). If these claims match each other, they can be set off, which means that instead of two separate payments, the amount is effectively settled in a single administrative step.

Unilateral set-off is also used where there is a clear mutual claim and one party wants to simplify the payment process. It is important for this document to be accurate and for both parties to be clearly identified, to avoid misunderstandings.

2. Bilateral set-off

• Initiator: Both parties are initiators and must agree to the process.
• Document: The document must be signed by both parties and must contain:
• • Full identification of both parties
  • A detailed description of the mutual receivables and payables
  • The signatures of the representatives of both parties

This form of set-off is used for set-offs that involve several items or larger amounts. For example, if two companies trade with each other regularly, one company may issue several invoices to the other and, at the same time, receive invoices from it for other goods or services. A bilateral set-off makes it possible to offset these obligations, which reduces the number of transactions and the cost of the financial transaction tax.

Example:

Štrk s.r.o. issues an invoice to Betón a.s. for material with a nominal value of €6,000 including VAT.

Betón a.s., in turn, supplies a different type of material to Štrk s.r.o., worth €3,000 including VAT.

If the funds were transferred, the transaction tax (at 0.40% of the transaction amount, but no more than €40 per transaction) would burden the companies as follows:

• Štrk s.r.o.: transfer of €3,000, transaction tax €12
• Betón a.s.: transfer of €6,000, transaction tax €24

Total transaction tax: €36

With a unilateral/bilateral set-off, the situation would look like this:
Štrk s.r.o. partially sets off its receivable against Betón a.s. in the amount of €3,000, which is also the value of what Betón a.s. supplied to Štrk s.r.o. After the set-off, only Betón a.s. owes Štrk s.r.o. the remaining amount of the partially offset invoice, i.e. €3,000. In terms of financial transactions, we are looking at a simplified situation:

• Betón a.s.: transfer of €3,000, transaction tax €12

Total transaction tax: €12

Bilateral set-off is also suitable where the parties have several smaller claims against each other that can be set off at once, which simplifies the whole process and reduces the administrative burden.

3. Three-party and multilateral set-off

• Characteristics: Several participants, consent of any of the parties; a direct creditor–debtor relationship does not have to exist between all the parties.
• Administration: Drawing up a set-off protocol and a record of the assignment of the obligation. The documentation must be very precise so that the obligations between the individual parties can be tracked unambiguously.

Example: Papier s.r.o. has a receivable of €5,000 from Tlačiarne O.Z. Tlačiarne O.Z. has a receivable of €8,000 from Publishing s.r.o., and at the same time Papier s.r.o. has a payable of €4,500 to Publishing s.r.o. This relationship creates a complex situation in which a three-party set-off makes it possible to settle all these receivables and payables efficiently without the need for separate financial transfers.

In practice, the individual steps would look like this:

1. Assignment of the receivable: Tlačiarne O.Z. can assign its receivable of €8,000 from Publishing s.r.o. in such a way that the obligations between the other participants are also taken into account. This means that the receivable of Tlačiarne O.Z. is set off against the payable of Publishing s.r.o.
2. Setting off the mutual obligations: Papier s.r.o. can set off its payable of €4,500 to Publishing s.r.o. against the existing receivable that Publishing s.r.o. has from Tlačiarne O.Z. The result is the settlement of an obligation of €4,500.
3. Remaining receivable: After the set-off, Publishing s.r.o. still owes Tlačiarne O.Z. €3,500 (€8,000 – €4,500). Likewise, Papier s.r.o. has had its receivable of €5,000 from Tlačiarne O.Z. settled, of which €500 still remains.

A three-party set-off therefore leads to a significant reduction in administrative costs, because it avoids the need to make three separate financial transfers. Instead, all the mutual relationships are settled through a single set-off. It also reduces the total transaction tax from €70 to €16, which saves all the companies involved a significant amount of money.

This example illustrates how effective a multilateral set-off can be in optimising the financial relationships between several companies. A solution like this can be particularly advantageous in complex business chains with many interlinked receivables and payables.

Conclusion

We are ready to help you prepare the documentation for offsetting receivables and payables. During a consultation, we analyse your customer–supplier chain in detail to identify the best options for optimising the tax. Do not hesitate to contact us – we will be glad to help you save time and money, while making sure that every step is carried out correctly and in line with current legislation.