Comments on ECJ Case C-232/24: VAT Treatment of Factoring Services in Finland Dispute

Single Indivisible Service: Advocate General Rantos concludes that the fees and commissions charged by A Oy for its factoring services represent payment for a single indivisible service, specifically the “collection of receivables,” which is subject to VAT.
Dispute over VAT Treatment: A Oy, a Finnish financial services provider, disagrees with the central tax authority’s ruling that a portion of its fees is VAT-exempt, arguing instead that all fees and commissions should be subject to VAT.
Preliminary Questions to the Court: The Finnish court has referred preliminary questions regarding the VAT treatment of A Oy’s fees and commissions to further clarify the tax obligations related to its factoring activities, whether through the assignment of receivables or invoice financing.

The case involves a dispute in Finland between A Oy and the central tax board regarding VAT treatment of commissions and fees for factoring services.
Factoring involves a company transferring outstanding invoices to a factoring company for a fee, improving cash flow.
The issue is how specific components of the fees A Oy receives should be classified for VAT purposes.
The question is whether these fees fall under VAT as debt collection services or are exempt as credit provision.
The decision will clarify VAT treatment of factoring services under EU rules, impacting the financial sector.
A-G Rantos suggests that certain fees charged by a factoring company are subject to VAT.
These fees include commissions and initial setup fees, considered as compensation for VAT-taxable services.
Factoring services are seen as a single service of debt collection, subject to VAT.
The VAT exemption exception is unconditional and precise, allowing direct application by national courts.