Comments on ECJ C-89/23: Pawnbroker – Commission received for forced sale of pledged goods – whether commission is exempt – no – taxpayer loss

Companhia União de Crédito Popular (CUCP) is a pawnbroker that grants loans guaranteed by moveable property, exempt under domestic law. When borrowers do not reclaim pledged goods or are late in repaying, CUCP auctions the goods and earns a commission of 11% of the auction price, without accounting for VAT. The taxpayer argues that the auction is linked to the loan and is exempt, and that the commission is a ‘fee’ rather than consideration for a service. The Court referred to case law on single versus multiple supply and noted that the sale of goods and granting of the loan are distinct independent supplies.

Source KPMG