Finetrading and VAT: Who Is Entitled to Input Tax Deduction in Supply Chain Financing?

• Finetrading is a form of non-bank trade financing where a “finetrader” buys goods on behalf of a buyer and grants extended payment terms for a fee.
• The finetrader acquires legal ownership of the goods but does not take physical possession; goods are delivered directly from seller to buyer.
• The key VAT issue is whether the finetrader obtains “power of disposal” over the goods, which is required for input VAT deduction.
• The Münster tax court denied the finetrader the right to deduct input VAT, as the finetrader lacked sufficient control over the goods.
• For VAT purposes, finetrading may be treated as a financing service rather than a taxable supply of goods.

Source: umsatz-steuer-beratung.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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