German Factoring, Securitisation and Receivables Finance – VAT Risk Under Section 13c VAT Act Resolved

    View Authors December 2017

    After years of legal uncertainty, a new amendment of the German VAT Act now resolves the risk of an acquirer of a receivable to be liable for unpaid VAT.

    The new law has ended a period of uncertainty that has lasted over a decade due to judgments of courts and circulars issued by the tax administration going back and forth. The original version of Section 13c provided for a liability of the acquirer of a receivable (whether by way of sale or security assignment) if the assignor of such receivable had not paid the respective VAT to the relevant tax authorities. Under the new version of Section 13c, the acquirer of the receivable will not be liable for the payment of such VAT if the seller of the receivable does not pay the VAT included in the relevant receivable to the relevant tax authorities, provided that the seller has received the consideration for the sale of such receivable from the acquirer and may freely dispose over such consideration