- The EU General Court held that VAT exemption for “management of credit by the person granting it” applies only while the original lender still has the borrower relationship; once the loan is sold, later servicing by the original lender is a separate supply to the purchaser of the receivable.
- Loan servicing fees paid by SPVs, refinancing vehicles, or investors to the originating lender for continued administration of sold loans are therefore subject to VAT.
- The Court rejected extending other VAT exemptions for security interests or receivables transactions to cover these credit-management services.
- The ruling is likely to affect securitisation and loan-transfer structures across the EU, especially where the acquirer has limited or no input VAT recovery, increasing transaction costs.
- The decision may narrow similar domestic exemptions, including potentially in Germany, where a broader reading had been uncertain.
Source: wts.cn
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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