Comments on ECJ C-89/23: Pawnbroker – Commission received for forced sale of pledged goods – whether commission is exempt – no – taxpayer loss

Companhia União de Crédito Popular (CUCP) is a pawnbroker that grants loans guaranteed by moveable property, exempt under domestic law. When borrowers do not reclaim pledged goods or are late in repaying, CUCP auctions the goods and earns a commission of 11% of the auction price, without accounting for VAT. The taxpayer argues that the auction is linked to the loan and is exempt, and that the commission is a ‘fee’ rather than consideration for a service. The Court referred to case law on single versus multiple supply and noted that the sale of goods and granting of the loan are distinct independent supplies.

Source KPMG

See also

• C-89/23 (Companhia União de Crédito Popular) – Judgment – Auction services for pledged goods are a separate service not linked to the related credit

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