On 17 June 2026, the EU General Court ruled in Case T-184/25 that a lender that sells its loans and goes on managing them for the buyer no longer falls within the VAT exemptions for credit.
The case
A Finnish bank granted property loans and sold a large proportion of them at market price to a wholly owned subsidiary, which was not in its VAT group. The subsidiary was financed largely by covered bonds, and most of the loans served as a guarantee for a bond at some point. The bank kept managing the loans in the same way as before and charged its actual costs plus a profit margin.
The ruling
None of the three exemptions applies.
- Management of credit, Article 135(1)(b). The exemption covers management by the person granting the credit, within the relationship between lender and borrower. Once the loan is transferred, the management is a paid service to the buyer, even if the original lender carries it out.
- Credit guarantees, Article 135(1)(c). Managing loans that secure a bond is not a dealing in guarantees. The only management covered there is management of credit guarantees by the person granting the credit.
- Debts, Article 135(1)(d). The services do not transfer ownership of funds. Applying this exemption would also undo the limit in Article 135(1)(b).
The purpose of the exemption does not change this. The difficulty of separating consideration for credit from consideration for its management does not arise here, because the management is a separately invoiced service.
What to check
- Securitisation and covered bond structures should review the VAT on servicing fees between seller and buyer.
- Check the buyer's position as well. If it has no right to deduct, the VAT becomes a cost.
- Keep debt collection in mind. In this case, the Finnish tax ruling already treated it as taxable.
mr. J. el Khalfioui LL.M.