Tax nuances of factoring operations: VAT exemption for certain types of debt objects

• Factoring operations are not subject to VAT if the object of the debt is currency, securities, including compensation papers, investment certificates, fixed-income mortgage certificates, etc.
• According to the Civil Code of Ukraine, factoring is a contract where one party (factor) transfers or undertakes to transfer money to the other party (client) for a fee, and the client assigns or undertakes to assign the factor his right to a monetary claim against a third party (debtor).
• The factor can be a bank or other financial institution authorized to carry out factoring operations.
• According to the Tax Code of Ukraine, certain operations, including factoring operations, are not subject to VAT, except for factoring operations where the object of the debt is currency, securities, including compensation papers, investment certificates, fixed-income mortgage certificates, operations involving the assignment of a claim right secured by mortgage loans, housing checks, land bonds, and derivatives.
• Therefore, factoring operations are not subject to VAT if the object of the debt is currency, securities, including compensation papers, investment certificates, fixed-income mortgage certificates, operations involving the assignment of a claim right secured by mortgage loans, housing checks, land bonds, and derivatives.
• Other factoring operations are subject to VAT.

Source: news.dtkt.ua

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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