By Alessia Zanatto, Raffaele Corso

The General Court of the European Union, in its judgment of 17 June 2026, Case T-184/25, “A“, addressed the issue of the VAT treatment to be applied to credit management operations taking place after said credits are assigned to a third party.

The question addressed in the judgment concerns the interpretation of Article 135(1), letters from (b) to (d) of Council Directive 2006/112/EC of 28 November 2006 (hereinafter, the “VAT Directive”)[1].

According to the description of the facts of the case – which does not appear to be entirely clear either in the Advocate General’s Opinion[2] or in the judgment itself – company A, which carries out banking activities and is the parent company of a VAT Group in Finland, after having granted property loans to its clients, transfers all the rights and obligations relating to the loans at issue to one of its subsidiaries, company B, which does not participate in the VAT Group[3].

Notwithstanding the transfer having taken place, company A handles, for the entire duration of the property loans, all the relations between the customers and company B, the transferee of the property loans. Company A therefore carries out – according to the description of the facts of the case – a management activity in respect of the property loans transferred to company B, consisting in ensuring the management of the services to customers holding those loans and the monitoring and depositing of the transferred loans, such as the calculation of rates, interest and commissions, the various amendments to the loans and, if necessary, debt collection services[4]

For the aforementioned services for the management of credits provided by company A, the latter invoices company B a consideration determined on the basis of the costs actually incurred, plus a profit margin[5].

The disputed question, referred to the General Court of the European Union, concerns the VAT treatment applicable to the aforementioned services for the management of credits, the consideration for which is invoiced by company A to company B and, specifically, the possibility of applying to those services the VAT exemption provided for by Article 135(1), letters from (b) to (d) of the VAT Directive[6].

The Court was therefore called upon, first of all, to determine “whether Article 135(1)(b) of the VAT Directive must be interpreted as meaning that the exemption which it provides for in respect of the management of credit applies to the services for the management of credit provided by the person who granted that credit, subsequently transferred that credit and continues to manage that credit for consideration for the transferee“[7] and, in particular, whether the condition laid down therein according to which the exemption for credit management services applies “by the person granting it” is satisfied in the specific case.

Notwithstanding the lexical divergences present in the various language versions of the VAT Directive – according to the Court, in fact, some versions  conjugate that condition in the past tense, leading to the conclusion that the person who benefits from the exemption provided for in that provision is the person who disbursed the amount of the credit to the borrower[8], while other versions, such as the English one, conjugate that condition in the present tense, leading instead to the conclusion that the provision refers to the capacity of the person as lender, that is to say the person to whom the credits have been assigned by another person[9] – the Court considers that, taking into account the context and purpose of the provision, the VAT exemption for “the management of credit by the person granting it” applies in the relationship between the transferee of the credit and the borrower and that, consequently, for the transferor of the credit, having assigned its credits to a third-party transferee, the management of those credits no longer falls within the initial legal relationship that gave rise to the right to benefit from the exemption, even though such management is materially carried out by the initial lender itself[10].

It follows that, according to the Court, the services relating to the management of the property loans, invoiced by company A to company B, cannot benefit from the VAT exemption, but constitute taxable supplies of services rendered for consideration directly for the benefit of the third-party transferee of the property loans.

Having clarified this, the Court also observes that are not applicable to the case at hand:

• neither the exemption under Article 135(1)(c) of the VAT Directive, since, from an objective standpoint, the services in question consist of credit management for the benefit of their purchaser and, therefore, cannot, as such, be classified as the taking on any dealings in credit guarantees or any other security for money within the meaning of the aforementioned Article 135(1)(c) of the VAT Directive[11];
• nor the exemption under Article 135(1)(d) of the VAT Directive, since nothing in the case file indicates that the management services at issue consist of a transfer of ownership of funds or are capable of performing the specific and essential functions of such a transfer, which are, instead, the subject of the exemption provided for by the aforementioned Article 135(1)(d) of the VAT Directive[12].

The judgment under review – which is entirely in line with the Advocate General’s Opinion – sets out a legal principle that. at least under an Italian generally adopted perspective, is undoubtedly innovative.

The description of the factual situation – as found both in the Advocate General’s Opinion and in the Court’s judgment – does not, however, make it easy to understand the exact scope of the principle established by the Court itself.

Such description, indeed, does not help to clarify whether the case actually concerns the issue of the VAT treatment of the management of assigned credits, as might appear at a first glance, given the analysis carried out by the judges, or whether, in reality, company A carried out vis-à-vis company B a different transaction involving the assignment of property loans contracts, given that the judgment, in describing the factual situation, specifically states that “All the rights and obligations relating to the loans at issue are transferred with the loans to B from the date of the transfer”[13].

This is indeed not a marginal matter, given, as it is well known, the potential different VAT treatment applicable, on the one hand, to credit assignment transactions and, on the other hand, to contract assignment transactions.

The sparse description of the services that company A renders to company B does not facilitate a clear understanding, in concrete terms, of the services that would actually be performed by company A vis-à-vis company B after the assignment of the property loans, given that, generally, as far as we are aware, in domestic banking practice a significant portion of the services described therein are rendered by the bank granting the loan to the borrower at the time of the execution of the property loan itself – and, therefore, generally, at a time prior to the possible assignment of the credit – or are remunerated by the borrower through the payment of interest.

Therefore, while acknowledging the legal principle set out by the Court, , the actual scope thereof within the national VAT system will need to be thoroughly assessed, particularly with regard to credit securitization transactions.

It is worth noting, in this respect, that, under the domestic VAT system, for securitization transactions meeting the conditions set out in Law No. 130 of 30 April 1999, and where the entity granting the credit (originator) is the entity performing the servicing activities, the servicing services benefit from the VAT exemption as credit management services rendered by the person granting them, pursuant to Article 10, first paragraph, No. 1), of Presidential Decree No. 633 of 26 October 1972.

This was clarified by the Italian Revenue Agency in Resolution No. 106/E of 17 November 2016.

Such interpretive position appears, in our view, at the very least capable of giving rise to a legitimate expectation, within the terms provided for by the settled case-law of the Court of Justice of the European Union and by Article 10(2) of Law No. 212 of 27 July 2000, until such time as the tax authorities consider that they may need to change their position.

---

[1] It is worth recalling that Article 135(1) of the VAT Directive provides as follows:

“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;

(c)      the negotiation of or any dealings in credit guarantees or any other security for money and the management of credit guarantees by the person who is granting the credit;

(d)      transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection;”

[2] See the Opinion of Advocate General Maja Brkan, delivered on 25 February 2026.

[3] See the judgment in Case T-184/25, specifically at paragraph 15.

[4] See the judgment in Case T-184/25, specifically at paragraph 17, which also specifies that “The scope of the services for the management of credit sold by A to B is the same as that which A would offer had it retained those loans”.

[5] See the judgment in Case T-184/25, specifically at paragraph 18.

[6] The question, more specifically, arises from the circumstance that, although company A had obtained a ruling from the Finnish Central Tax Commission according to which the services in question should be regarded as VAT exempt, the Finnish Tax recipients’ legal services unit challenged that ruling, questioning the applicability of the exemption to the services for the management of credit at issue. The Supreme Administrative Court of Finland, called upon to decide the dispute, therefore decided to refer the question to the General Court of the European Union.

[7] See the judgment in Case T-184/25, specifically at paragraph 25.

[8] Even though the judgment in Case T-184/25 does not make any explicit reference, among these linguistic versions there is also the Italian one.

[9] See the judgment in Case T-184/25, specifically at paragraph 29.

[10] See the judgment in Case T-184/25, specifically at paragraph 33.

[11] See the judgment in Case T-184/25, specifically at paragraph 50.

[12] See the judgment in Case T-184/25, specifically at paragraph 57.

[13] See the judgment in Case T-184/25, specifically at the already cited paragraph 15.