VAT on post-transfer loan servicing: the A Oy ruling challenges Belgian practice

On 17 June 2026, the General Court of the European Union held in Case T-184/25 (A Oy) that an originating lender which transfers loans and then continues to service them for the transferee cannot rely on the VAT exemption for the “management of credit by the person granting it”.

The judgment is particularly relevant to securitisation, covered-bond and other refinancing structures. It also conflicts directly with the position currently set out in Belgian Circular 2018/C/49.

The facts in brief

A Finnish bank (“A”) granted mortgage loans and transferred a large proportion of them to its wholly owned subsidiary (“B”), which was not part of the same VAT group. The transfer covered all rights and obligations connected with the loans. B used most of the transferred loans as security for bonds that it issued.

A nevertheless continued to manage the loans and the associated guarantees on B’s behalf. Its tasks included customer service, calculating repayments, interest and fees, handling amendments and collection, and representing B towards the borrowers. B remunerated A on a cost-plus basis.

The General Court’s ruling Article 135(1)(b) of the VAT Directive exempts the granting and negotiation of credit and “the management of credit by the person granting it”. The different language versions did not provide a conclusive answer as to whether that wording referred to the original lender or the current lender.

The General Court therefore relied on the context and objectives of the exemption. It considered that the exemption covers credit management performed within the credit relationship between the lender and the borrower. Once all rights and obligations under the loans had been transferred, A was no longer the lender in that relationship. Its continued servicing was instead a separate service supplied for consideration to B.

The principle of fiscal neutrality supported the same result: servicing supplied to the transferee by the original lender should not receive more favourable treatment than the same servicing outsourced to any other third party.

The General Court also rejected the alternative exemptions for dealings in credit guarantees or other securities and for transactions concerning debts. Those provisions could not be used to circumvent the specific limitation governing credit management.

The servicing fee therefore falls outside the financial-services exemptions examined by the Court and is, in principle, taxable under the ordinary VAT rules.

A direct conflict with Belgian administrative practice

Article 44, § 3, 5° of the Belgian VAT Code transposes Article 135(1)(b) of the VAT Directive. Circular 2018/C/49 currently accepts that, where a credit portfolio is transferred and its management remains entrusted to the original lender, the management services supplied to the transferee may remain exempt.

That position can no longer be reconciled with A Oy where the transaction entails a full transfer of the lender’s rights and obligations. A revision of the Belgian administrative guidance should therefore be expected.

Historical periods require a more nuanced analysis. The judgment contains no express limitation of its temporal effects. The published Belgian Circular may nevertheless provide a basis for invoking legal certainty and legitimate expectations where a taxpayer relied on it in good faith. The availability and scope of that protection will depend on the facts and should not be treated as automatic, particularly for services supplied after the judgment.

Practical takeaways

Affected groups should now:

• identify loan transfers under which the originator continues to service the loans for a separate fee, including intra-group and cross-border arrangements;

• quantify the potential VAT leakage for the transferee or vehicle, which will often have a limited or no right to deduct input VAT, and review pricing, gross-up, tax-indemnity and change-in-law clauses;

• reassess the prospective invoicing and reporting treatment, taking account of the place-of-supply and reverse-charge rules, while documenting any historical reliance on Circular 2018/C/49; and

• examine possible mitigation measures, such as a VAT group, insourcing or an alternative risk-transfer structure. A Oy concerned a transfer of all rights and obligations and does not resolve structures in which the originator transfers only economic risk or the receivable while remaining the contractual lender.

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CMS Belgium Tax Team is there to assist you

The CMS Belgium Tax Team would be pleased to help financial institutions and investors assess the impact of A Oy on existing servicing arrangements and design VAT-efficient refinancing structures. Please reach out to your regular CMS Belgium contact if needed.