Credit management after a loan sale: the General Court seems to close the door, but leaves a few questions ajar

On 17 June 2026, the General Court of the European Union (the GC) rendered its judgment in case T-184/25 (Veronsaajien oikeudenvalvontayksikkö v A Oy). The GC held that a lender who originates loans, sells them on, and continues to service the loans for the purchaser cannot rely on the VAT exemption for "the management of credit by the person granting it" (article 135(1)(b) of the EU VAT Directive).

The practical effect of the judgment may be felt in particular in securitisation structures, as the servicing fee charged by the originator to any special purpose vehicle (SPV) may, in certain instances, now have to be charged subject to VAT. Given that the SPV typically makes only exempt supplies, the SPV may be unable to recover such VAT, potentially turning it into a hard cost.

The case in brief

A Finnish bank (A) granted residential mortgage loans and immediately sold them to its wholly-owned subsidiary (B), which used the loans as security for bonds it issued. A continued to manage the loans for B against a fee. The Finnish court asked whether that management was exempt under Article 135(1)(b), (c) or (d) of the Directive.

The GC responded negatively on all three possible exemptions. On subclause (b), it held that the exemption covers management within the original lender–borrower relationship; once A assigns the loans, that relationship disappears, and A's continued servicing becomes a supply to the assignee. Subclauses (c) and (d) effectively failed on a lex specialis rationale: since (b) governs credit management and restricts it to the grantor, the other subclauses cannot be used to circumvent that restriction.

Notably, the GC reached the same outcome as Advocate-General Brkan (the AG) in her opinion, but on a leaner footing. It dropped the AG's legislative-history analysis and anti-avoidance arguments, and instead leaned on two core arguments: the disappearance of the original relationship, and the absence of valuation difficulties where management is separately invoiced on a cost-plus basis.

Why the result is not self-evident

The wording "by the person granting it" is genuinely ambiguous; a point both the AG and the GC conceded after surveying the various language versions of the Directive. Some (e.g. the French and Dutch versions) use the past tense, pointing to the original lender; others (e.g. the English version) use the present, pointing to the current lender; while the German and Finnish versions are open to both readings. On the past-tense reading, A (i.e. the entity that actually made the original loans) remains the person "who granted" the credit. The GC's conclusion therefore seems to rest on an interpretive choice.

Three points worth mentioning

First, there may be a slight tension with the ruling of the Court of Justice (ECJ) in case C‑250/21 (O. Fundusz). In O. Fundusz, the ECJ held that the Article 135(1) exemptions are defined by reference to the nature of the services provided, not the person supplying or receiving the service. The GC takes the opposite position here: its analysis turns on the identity of the supplier. O. Fundusz, however, was decided on the "granting of credit" wording, which contains no reference to who provides the service, and the ECJ's statement was intended to reject the argument that this is confined to banks and financial institutions. The wording at issue here, "management of credit by the person granting it," expressly writes the identity of the provider into the definition. The GC was therefore arguably doing no more than giving effect to a supplier-specific condition built into this exemption that was absent from the specific wording interpreted in O. Fundusz. The two are not necessarily irreconcilable, but it is worth noting that the GC does not draw the distinction and does not engage with the ECJ’s judgment in O. Fundusz at all.

Second, there is a divergence in method. O. Fundusz was evidently substance-over-form: the form of remuneration was "irrelevant," the absence of guarantees "not decisive," and the retention of receivables on the originator's books did not alter the financing nature of the deal. Here, the GC is more formalistic, attaching decisive weight to the disappearance of the legal relationship, while acknowledging that A performs exactly the same management it would have performed had it kept the loans. A more economic approach may instead have pointed towards exemption.

Third, the GC's reasoning is notably leaner than the AG's, and it leaves several of the AG's arguments untouched. These include the AG’s reasoning on anti-avoidance considerations, the legislative history of the personal-scope restriction, and the AG's justification for that restriction (that credit management warrants a separate exemption because it is not always sufficiently ancillary to the granting of credit, a rationale that sits somewhat awkwardly with then confining the exemption to the current lender). The GC does not engage with any of this, resting its conclusion instead on the disappearance of the original lender–borrower relationship and the absence of valuation difficulties. 

An important factual caveat

T-184/25 appears to have concerned a transfer of all rights and obligations under the relevant loan agreements, i.e. a full transfer of the contractual relationship. This is not always how securitisations are structured in practice. Often the originator merely assigns the receivable while remaining the contractual counterparty to the borrower, retaining the associated rights and obligations. The GC's repeated emphasis on the disappearance of the "original legal relationship" leaves open (and arguably may even support) the argument that a lender who assigns only the receivable, but stays party to the loan, may still qualify as "the person granting it." The judgment does not resolve this, and it may be the next battleground.

Conclusion

The judgment may be questioned on several fronts, but as it stands it may have a practical impact on securitisation structures in particular. Because an SPV typically makes only exempt supplies (the issuance of bonds and the provision of credit), it will generally have no right to deduct input VAT. Any VAT due on the originator's servicing fee may therefore become an unrecoverable additional cost within the structure; arguably the kind of cost increase that the exemption for financial services was originally intended to avoid. That said, taxpayers may wish to explore alternative angles not addressed in T-184/25, for instance, whether the transfer of a portfolio together with the servicing arrangement could qualify as a transfer of a going concern falling outside the scope of VAT, or whether the sale of a package of "serviced" receivables might be characterised differently.

As a final point, it is worth recalling that this concerns a GC decision in a preliminary-ruling context. Under Article 62 of the Statute of the Court of Justice, the AG may, where there is a serious risk to the unity or consistency of EU law, propose that the ECJ review a GC decision. Whether that route will be taken here is highly uncertain, as such reviews are rare and the threshold demanding. For now, however, the GC’s judgment may not necessarily be the final say on the matter.