Opinion of Advocate General Maja Brkan of 25 February 2026, Case T-184/25
Background
In refinancing structures, credit portfolios are frequently transferred, while the day-to-day servicing remains with the originating bank. For the borrower, little changes. From a VAT perspective, however, the focus shifts to the servicing fee received by the bank after the transfer. Can that remuneration still fall within the exemption for “the management of credit by the person granting it” under Article 135(1)(b) of the VAT Directive?
The Advocate General answers in the negative. In her view, the exemption does not hinge on the historical role of the party that originally granted the credit, but on the current status of lender at the time the management services are performed. Once the credit has been transferred, the original bank is no longer acting as lender. It is, in principle, supplying a taxable service to the new lender.
Legal framework
The discussion takes place within Article 135(1) of the VAT Directive, which provides exemptions for financial services. Three provisions are particularly relevant.
• Article 135(1)(b): the granting of credit and the management of credit by the person granting it.
• Article 135(1)(c): transactions concerning guarantees and other securities, as well as the management of credit guarantees by the person granting the credit.
• Article 135(1)(d): transactions concerning, inter alia, claims and payments.
The key element is the personal condition in Article 135(1)(b). The exemption is not designed as a general exemption for credit servicing. It is tied to the status of lender.
Preliminary questions
The referring court essentially asks whether “the person granting the credit” refers to the original lender who granted the credit at the outset, or to the party that holds the lender position at the time the management services are performed.
It also raises the question whether the servicing could nevertheless fall under another exemption, notably those relating to guarantees and securities, or to transactions concerning claims and payments.
Advocate General’s opinion
The Advocate General observes that the wording of Article 135(1)(b) is not uniform across language versions and does not provide a decisive answer. She therefore bases her analysis on the purpose and structure of the exemption, in particular on identifying which party must satisfy the personal condition.
She concludes that “the person granting the credit” refers to the current lender, namely the party that holds the creditor position at the time the management services are carried out. Once the credits are transferred, that status shifts to the transferee. The originating bank no longer manages its own credits but provides a management service on behalf of the new lender. That service is, in principle, subject to VAT.
Two central arguments support this conclusion.
First, fiscal neutrality. The same management service cannot be exempt when supplied by the seller, yet taxable when supplied by another service provider. Otherwise, the choice of provider would be VAT-driven.
Second, the prevention of abuse. If the historical granting of the credit were sufficient to meet the personal condition, that condition could easily be structured and would lose its limiting function.
Alternative exemptions are also rejected. Article 135(1)(b) is the specific provision governing credit management and cannot be circumvented through Article 135(1)(c) merely because the credits serve as security for bonds. Nor can Article 135(1)(d) apply solely because certain elements of the service are connected to claims or payments.
Finally, the argument that the servicing could qualify as an ancillary supply to the transfer of the credits is dismissed. For the transferee, the servicing is not inseparable from the sale and may perfectly be entrusted to another provider. It therefore constitutes an autonomous service with its own VAT treatment.
Comment
These conclusions once again highlight the limits of the current VAT regime for financial services. Article 135 attempts to frame securitisation, servicing and capital market structures using concepts developed in the 1970s. Case law is left to fill the gaps of a framework that no longer fully reflects economic reality.
The reading is strict and legally coherent. However, the practical impact is significant. In many Member States, servicing after transfer is often treated as a continuation of the original credit transaction. The Advocate General draws a clear line. After transfer, the servicing is no longer exempt credit management, but a taxable service rendered to the new lender.
In Belgium, this position could call into question the administrative practice whereby the original lender may, even after transfer, apply the exemption under Article 44, § 3, 5° of the Belgian VAT Code to management services supplied to the transferee, whereas similar services provided by a third party are, in principle, subject to VAT, as stated in Circular 2018/C/49 of 24 April 2018.
If the Court follows the Advocate General, the Belgian practice will once again come under pressure. This time, the financial impact will fall primarily on the financial sector. In refinancing structures where the transferee has a limited or no right to deduct input VAT, VAT on the servicing fee becomes a real cost that directly affects profitability.
Financial markets evolve rapidly. The VAT framework struggles to keep pace. Absent structural reform, case law will continue to adjust a system that is increasingly showing its limits.