- Factoring’s VAT treatment depends on the economic structure of the deal, especially who actually handles debt collection.
- The Düsseldorf Fiscal Court held that if the factor buys the receivables but transfers collection back to the seller via a service agreement, this is not a taxable factoring service by the buyer.
- The decisive point is the actual collection of the receivable: whoever collects it provides the taxable factoring service.
- The EU Court of Justice later confirmed in “Kosmiro” that the factoring service is unitary in nature.
- The article uses this case law to generalize the definition of factoring and warns of potential input VAT pitfalls.
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.
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