Opinion of the Advocate General — ECLI:EU:C:2003:132
Date: 2003-03-06
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Germany

Summary of the Judgment 
1. Tax provisions — Harmonisation of laivs — Turnover taxes — Common system of 
value added tax — Economic activities for the purpose of the Sixth Directive — 
Meaning — Purchase of debts with assumption of the risk of the debtors' default — 
Covered 
(Council Directive 77/388, Arts 2, 4 and 17) 
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SUMMARY — CASE C-305/01 
2. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of 
value added tax — Exemptions provided for by the Sixth Directive — Banking 
transactions referred to in Article 13B (d)(3) — Exclusion of 'debt collection and 
factoring' — Meaning — Purchase of debts with assumption of the risk of the 
debtors' default — Covered 
(Council Directive 77/388, Art. 13B(d)(3)) 
1. On a proper construction of the Sixth 
Directive (77/388) on the harmon­
isation of the laws of the Member 
States relating to turnover taxes, a 
business which purchases debts, assum­
ing the risk of the debtors' default, and 
which, in return, invoices its clients in 
respect of commission (true factoring) 
pursues an economic activity for the 
purposes of Articles 2 and 4 of that 
directive, so that it has the status of 
taxable person and thus enjoys the 
right to deduct tax under Article 17 
thereof. 
First, the factor indisputably supplies a 
service to the client, consisting essen­
tially in relieving him of the debt-re­
covery operations and of the risk of the 
debts not being paid. Second, in return 
for that service received by him, the 
client owes payment to the factor, 
corresponding to the difference 
between the face value of the debts 
which he has assigned to the factor and 
the amount which the factor pays him 
for the debts. 
(see paras 49, 59, operative part 1) 
2. An economic activity by which a busi­
ness purchases debts, assuming the risk 
of the debtors' default, and, in return, 
invoices its clients in respect of com­
mission (true factoring), constitutes 
debt collection and factoring within 
the meaning of the final clause of 
Article 13B(d)(3) of the Sixth Directive 
(77/388) on the harmonisation of the 
laws of the Member States relating to 
turnover taxes and is therefore 
excluded from the exemption laid 
down by that provision. 
In accordance with its objective char­
acter, the essential aim of factoring is 
the recovery and collection of debts 
owed to a third party. Therefore, fac­
toring must be regarded as constituting 
merely a variant of the more general 
concept of 'debt collection', whatever 
the manner in which it is carried out. 
(see paras 77, 80, operative part 2) 
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