- The EU General Court ruled that loan servicing fees become subject to VAT once the loans are transferred to a third party.
- The VAT exemption for credit management applies only while the entity managing the loan is the current lender.
- After transfer, that exemption no longer applies.
- For special-purpose securitisation vehicles, this means input VAT on servicing fees is typically irrecoverable because their operations are VAT-exempt.
- As a result, the VAT becomes a hard cost that may hurt transaction economics and investor returns.
Source: tlt.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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