European Court of Justice Issues Preliminary Ruling on VAT Treatment of Auctioning Pledged Goods

The European Court of Justice (ECJ) April 18 issued a preliminary ruling for Case No. C-89/23, on the VAT treatment of sales through the auction of pledged goods in the context of a pawnbroker loan. The taxpayer, a Portuguese pawnbroker company, carried out auctions of pledged goods when borrowers defaulted on their loans. The tax authority held the taxpayer liable for VAT on the sales commissions earned from the auctions. The Supreme Administrative Court of Portugal referred the case to the ECJ, asking whether the auction services are ancillary to VAT-exempt loan services. The ECJ held, following Council Directive 2006/112/EC, ...