By Dr. Kurt Dittrich, Linklaters Oppenhoff & Rdler.

On 26 June 2003, the European Court of Justice delivered a judgment on the extent to which the Sixth VAT Directive of 17 May 1977 applies to factoring transactions. The ruling was in response to a case submitted by the German Federal Tax Court (Bundesfinanzhof) in 2001 (File-no. C-305/01) involving the issue of whether a factor involved in true sale factoring (echtes Factoring) is entitled to recover so-called "input" VAT paid to third- party suppliers of goods and services.

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