- The Düsseldorf Fiscal Court examined whether a refinancing arrangement was a taxable second factoring service or merely a tax-free sale of receivables in a cross-border context.
- It held that if the second factor only assumes the default risk but performs no collection activities itself, there is no factoring service supplied to the first factor.
- This remains true even if the contracts formally assign collection to the second factor, but a separate service agreement sends collection back to the first factor.
- What matters is the actual economic reality of how the parties operate, which in this case pointed against second factoring.
- The distinction was especially important because it affected the first factor’s input VAT deduction.
Source: datenbank.nwb.de
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.
