Factoring Commission: Service Supply or Debt Acquisition Price Adjustment Under VAT Directive?

• The Court of Justice of the European Union delivered an opinion on a Finnish case involving Kosmiro and the nature of factoring services.
• The case examines whether the factoring commission is an adjustment to the purchase price of debts or a service fee under the VAT Directive.
• Factoring involves a company acquiring debts from clients to provide early payment and improve cash flow.
• The company assumes responsibility for debt collection and may offer guarantees against non-payment.
• A Finnish company provides financial services, including invoice and trade factoring, to clients with low cash flow.
• Invoice factoring allows clients to retain creditor status while transferring collection responsibility.
• Trade factoring involves the company purchasing debts outright, assuming ownership and default risk.
• Fees charged include a commission based on payment terms and credit rating, and various other service fees.

Source: linkedin.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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