In line with its objective to simplify VAT in the single
market, the European Commission is reviewing the VAT rules for financial and
insurance services. The Commission's basis for this review is that the current
rules on VAT treatment of financial and insurance services do not reflect the
reality of the sector and are applied inconsistently by the member states. It
sees these factors as likely to contribute to distortions in the internal
market.
It has launched a roadmap which proposes that the two main
possible policy options are to remove the existing financial services exemption
in order to tax financial and insurance services, or to keep the exemption, but
to modify its scope through taxing only some types of services. Measures such
as the introduction of cost-sharing arrangements (possibly cross-border),
arrangements to address technical problems of taxing high-frequency trading and
the place of supply rules could be included in the work.
The roadmap is open for feedback until 19 November. Feedback
received will be included in a synopsis report with a public consultation then
scheduled for the first quarter of 2021.
In line with its objective to simplify VAT in the single
market, the European Commission is reviewing the VAT rules for financial and
insurance services. The Commission's basis for this review is that the current
rules on VAT treatment of financial and insurance services do not reflect the
reality of the sector and are applied inconsistently by the member states. It
sees these factors as likely to contribute to distortions in the internal
market.
It has launched a roadmap which proposes that the two main
possible policy options are to remove the existing financial services exemption
in order to tax financial and insurance services, or to keep the exemption, but
to modify its scope through taxing only some types of services. Measures such
as the introduction of cost-sharing arrangements (possibly cross-border),
arrangements to address technical problems of taxing high-frequency trading and
the place of supply rules could be included in the work.
The roadmap is open for feedback until 19 November. Feedback
received will be included in a synopsis report with a public consultation then
scheduled for the first quarter of 2021.
