International Taxation of Income from Factoring and Loans
A Private Limited Company based on the Isle of Man (IOM) acquires claims in Germany from a private loan transaction that is in default and secured by a mortgage, at a price below their face value.
(Example: Purchase of a claim with a face value of 100,000 EUR for 10,000 EUR)
The claims, including the mortgages, are assigned to the IOM Ltd. The claims are enforced by the IOM Ltd. through a forced sale. The forced sale results in a revenue of 90,000 EUR for the IOM Ltd.
Is the revenue taxable in Germany and subject to value-added tax?
The IOM Ltd. lends money to a German GmbH.
Are the interest income from the loan taxable in Germany? Does the tax liability change if the loan is granted by a company based in the UK?
