Commission contract or trading under someone else's name

There are a number of intermediaries in the market who resell goods or services to end customers. They often carry out their work on the basis of a so-called commission contract. Find out how such cooperation works.

What is a commission contract?

The principle of commission is legally regulated by Sections 2455-2470 of the Civil Code. Under a commission contract, the commission agent (essentially a middleman) undertakes to procure a certain performance for the principal (the principal) under his own name but on the principal's behalf - for example, to sell goods or services on his behalf.

The principal then pays the agreed remuneration for the use of the intermediary's (commission agent's) services. This may be a fixed amount, or it may be a variable fee typically set as a commission or a percentage of the value of the sale.

What might this look like in practice? A commission contract is often used in (car) bazaars. The seller entrusts the car to the car dealer, who arranges the sale of the car and its transfer to the new owner. The dealer often does not meet the original owner of the car at all. The car dealer then charges a commission for the transaction.

Commission sales are also used by some shops. For example, shop owners provide space for the display of goods, but the supplier receives the proceeds only when the goods are sold.

Is consignment sales profitable?

It always depends on the specific situation. Like other business models, consignment sales have advantages and disadvantages. We've put together an overview to help you decide whether it's worthwhile for you:

Benefits of commission sales

Commission-based trading has long been popular because it usually benefits both parties.

Commissioners benefit from the reputation of the intermediary to sell their goods more easily. In addition, they set the price at which the product is sold. Commission agents, on the other hand, do not have to invest in the purchase of the goods and benefit from the intermediation of the trade.

Disadvantages of commission sales

However, there are also pitfalls to commission sales. The main one is the fact that the owner of the goods places full trust in the commission agent. It is therefore advisable to treat the relationship under the supervision of a lawyer, which means extra costs. If the principal chooses the wrong agent, the whole situation can backfire - an incompetent commission agent will not be able to sell the goods and, in a worse case, may damage the principal's image.

For the commission agent, brokering the sale is administratively demanding, as it involves a number of accounting and tax necessities (see below).

How is the transaction reflected in accounting and tax?

Commission sales are accounted for differently by each of the parties involved:


The owner of the goods being sold records the actual sale and removal of the goods (after the transaction) in a 504-x account. In addition, he reflects the remuneration of the commission agent as an expense (account 518-x). He then includes in income the proceeds from the sale of the goods to the final customer. The difference between these items then represents his taxable profit.

The commission agent

The intermediary, on the other hand, does not account for the goods sold at all. It includes in its accounts only the commission it invoices to the principal, in accordance with National Accounting Council Interpretation I-7. On the expense side, he will then have his normal operating expenses (rent, wages, depreciation, fees, etc.). The difference is again his taxable profit.

However, the VAT situation is more complex - so much so that the tax administration has issued additional information on the issue. There is a legal fiction according to which the commission agent provides a separate supply as if it were a supply of his goods or services (even though he supplies goods or services to the principal).

He can therefore account for the transaction in two ways:

  • the acquisition of the goods and their subsequent sale, including the margin which effectively represents the principal's remuneration (all subject to VAT for the taxpayer);
  • the acquisition of the goods and their sale at cost (the margin is therefore zero) and the recognition of the commission (all subject to VAT for the taxable person).


The end customer accounts only for the purchase of goods from the principal. The commission fee is part of the relationship between the commission agent and the principal and is therefore already de facto included in the price of the goods.

Are you unsure about the accounting?

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