VAT Guidelines for Debt Factoring and Invoice Discounting

• The document covers VAT treatment of debt factoring and invoice discounting under the VAT Consolidation Act 2010
• The document was updated in December 2024
• Debt factoring involves the financier buying debts from a client, notifying debtors, collecting debts, and providing advance funding
• Invoice discounting involves the client assigning debts to a financier and collecting them as the financier’s agent, which can be disclosed or confidential
• Debt factoring and invoice discounting can be with recourse, where the client bears the risk of debtor default, or without recourse, where the financier bears the risk
• The sale and acquisition of debts or non-performing loans in these contexts are VAT exempt

Source: revenue.ie

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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