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An analysis by Borenius, Taxand Finland
Borenius, our Finnish member firm, has obtained a significant Supreme Administrative Court ruling which clarifies how the ECJ’s judgment affects the VAT treatment of factoring in Finland. The ruling confirms that factoring activities are to be treated in their entirety as taxable debt collection services, fully aligning with the ECJ’s interpretation of the VAT Directive.
The ruling is significant as it clarifies that the Finnish VAT Act’s exemption for ‘other provision of financing’ must be interpreted narrowly in accordance with the VAT Directive and ECJ case law.
For factoring companies operating in Finland, the ruling establishes that all factoring fees – including factoring commissions, arrangement fees, limit fees, fees for quick payment, and credit rating fees – are subject to VAT as consideration for debt collection services. Factoring companies should review their VAT treatment and ensure that all such fees are treated as taxable going forward.
Henna Jovio and Anna-Riikka Nummi from our Finnish member firm Borenius have analysed this ruling in further detail here.
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