Finnish Supreme Court Clarifies VAT on Factoring Fees: All Fees Now Taxable Debt Collection Services

• The Supreme Administrative Court (SAC) of Finland ruled that all fees related to factoring, including commissions and arrangement fees, are subject to VAT as taxable debt collection services, not as VAT-exempt financial services.
• The SAC’s decision aligns Finnish VAT treatment of factoring with the European Court of Justice (ECJ) ruling and the VAT Directive.
• The ruling provides legal certainty and clarifies that the Finnish VAT Act’s exemption for “other provision of financing” must be interpreted narrowly.
• The Tax Administration was ordered to compensate the company’s legal costs, which is notable for an advance ruling case.
• The decision has significant implications for the VAT treatment of all factoring arrangements in Finland.

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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