Relevant article in the EU VAT Directive 2006/112/EC
Article 135
1. Member States shall exempt the following transactions:
(b) the granting and the negotiation of credit and the management of credit by the person granting it;
Article in the Sixth VAT Directive: 13(B)(d)(1)
ECJ Cases Decided
- C-207/87
- C-281/91 (Muys’ en De Winter’s Bouw- en Aannemingsbedrijf BV) – Grant of deferred payment against consideration of interest, by supplier of goods or services: Granting of deferred payment with interest compensation by the supplier of goods or services. The ruling clarifies the conditions under which deferred payment can be considered as credit provision.
- C-453/05 (Ludwig) – Concept of “credit intermediation acts”: Definition of “credit mediation activities.” This case provides insight into which activities qualify as credit mediation for VAT exemption.
- C-276/09 (Everything Everywhere) – Additional fees charged when using certain methods of payment for mobile telephony services: Additional costs associated with certain payment methods for mobile telephony. The ruling discusses whether such costs can be viewed as part of credit provision.
- C-381/09 (Gennaro Curia) – Activity of providing usury loans falls within the scope of the Sixth Directive: Usury loans fall within the scope of the Sixth Directive. This case confirms that usury loans, despite their negative connotation, can be covered by VAT exemption.
- C-93/10 (GFKL Financial Services) – Purchases of defaulted debts at a price below their face value is not a taxable transaction/economic activity: Purchase of irrecoverable debts at nominal value is not a taxable transaction/economic activity. The ruling clarifies that the purchase of such debts is not considered an economic activity under the VAT directive.
- C-130/15 (NEC) – Processing of debit and credit card payments exempt from VAT? (Bookit C-607/14, NEC C-130/15, Cardpoint C-42/18): Processing of debit and credit card payments exempt from VAT? This case, along with Bookit (C-607/14) and Cardpoint (C-42/18), examines the VAT treatment of card payments.
- C-208/15 (Stock ’94) – Supply of goods and a grant of a loan constitutes a single transaction: Delivery of goods and provision of a loan constitute one transaction. This ruling has significant implications for the VAT treatment of combined transactions.
- C-692/17 (Paulo Nascimento Consulting – Exemption for transactions relating to the granting, negotiation and management of credit – assignment of a position held in enforcement proceedings for recovery of a debt recognised by a judgment: Exemption for transactions related to the granting, negotiating, and managing of credit – assignment of a position in an enforcement procedure for collecting a court-recognized debt. This case clarifies the scope of the exemption in the context of collection.
- C-235/18 (Vega International) – Financing in advance purchase of fuel is an exempted financial service: Pre-financing of fuel is an exempt financial service. The ruling confirms that pre-financing can fall under the VAT exemption for financial services.
- C-695/19 (Rádio Popular) – Exempt Insurance commissions to be included in the turnover to calculate the denominator for proportional VAT deduction: Exempt insurance commissions must be included in revenue to calculate the denominator for proportional VAT deduction. This case has implications for calculating VAT deductions in mixed activities.
- C-801/19 (FRANCK) – VAT exemption applicable when resources for financial activities are made available: VAT exemption applies when resources for financial activities are made available. This case clarifies the conditions under which the provision of resources for financial activities falls under the exemption.
- C-250/21 (O. Fundusz lnwestycyjny zamknięty reprezentowany przez O) – Exemption for the granting of credits apply applies to sub-participation agreements: Exemption for granting credit applies to sub-participation agreements. This ruling extends the scope of the exemption to specific financial instruments.
Pending Cases
- C-89/23 (Companhia União de Crédito Popular) – Questions – Whether the commission which the law grants to the lender for the sale at auction of pledged goods may be regarded as an ancillary service to the principal service
- C-232/24 (Kosmiro) – Questions – VAT implications factoring
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