Tax & Legal

In its decision of today, the General Court held that the VAT exemption for “the management of credit by the person granting it” under Article 135(1)(b) of the VAT Directive does not apply in a case where the credit is sold to a third company and whilst the management of that credit is retained by the seller.

According to the ECJ, financing provided to the originator under a sub-participation agreement is a VAT exempt transaction and complies with the exempt transactions listed Article 135(1)(b) of Council Directive 2006/112/EC (VAT Directive) concerning “the granting and the negotiation of credit and the management of credit by the person granting it”.