What Kosmiro Taught Us about the VAT Treatment of Transfers of Debt

On 23 October 2025, the Court of Justice of the European Union (CJEU) delivered its much-anticipated judgment in the Kosmiro case, addressing the VAT treatment of various forms of factoring and, more broadly, the transfer and financing of debt. This article analyses the Kosmiro judgment and places it in the context of the CJEU’s evolving case law on VAT and debt transfers, including MKG-Kraftfahrzeuge-Factoring and GFKL Financial Services, where the CJEU draws the line between taxable debt collection, VAT-exempt credit transactions and out-of-scope transfers of debt. It critically examines the CJEU’s characterization of factoring as a taxable debt collection service, questioning whether this reflects commercial realities where financing is often the primary driver. The article concludes with practical observations on the implications of Kosmiro for VAT risk assessment, structuring and documentation, particularly for complex financing arrangements.