Comments on ECJ Case C-232/24 (Kosmiro): Factoring Fees Are Subject to VAT as Single Indivisible Debt Collection Service

• The European Court of Justice ruled that both trade factoring and invoice factoring fees are subject to VAT as a single, indivisible supply related to debt collection, not as exempt financial services.
• Factoring involves a company assigning unpaid invoices to a factoring company for early payment, with trade factoring transferring ownership and risk, and invoice factoring using receivables as collateral.
• The case arose due to unclear Finnish legal practice on VAT treatment of factoring fees, leading to a request for a preliminary ruling from the ECJ.
• The ECJ clarified that both factoring commission and arrangement fees are taxable under the VAT Directive when the factoring company relieves clients of debt recovery and non-payment risk.
• The judgment provides guidance for consistent VAT treatment of factoring fees in Finland and potentially across the EU.

Source: borenius.com

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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