vat as a net cost for banks: vat grouping...at be cy cz dk ee fi de hu ie it lv nl sk es se uk...
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VAT as a net cost for banks: VAT Grouping
Ine Lejeune
EBF Tax Conference
22 November 2017
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VAT Grouping within the EU
Article 11 of VAT Directive 2006/112/EC:
“After consulting the advisory committee on value added tax (the “VAT Committee”), each Member State may regard as a single taxable person
any persons established in the territory of that Member State who, while legally independent, are closely bound to one another by
financial, economic and organisational links.
A Member State exercising the option provided for in the first paragraph, may adopt any measures needed to prevent tax evasion or
avoidance through the use of this provision”
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VAT Grouping is one of the most important VAT factors to attract and retain financial services operators and outsourcers
3
20
11
5
8
5
1
0
5
10
15
20
25
Definition ofFinancial Services
VAT Group Rules Pro-RataCalculation
Use of Derogations Use of Options Other
Source: Study to increase the understanding of the economic effects of the VAT exemption for financial and insurance services, PwC, Report to the European Commission - September 2006
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VAT Grouping within the EUMember States with/without VAT Grouping
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Member States with VAT grouping (13)
Member States with Mandatory VAT grouping (3)
VAT grouping as from 2018 (Mandatory VAT grouping) (1)
Member States with no VAT grouping (8)
Member States with no VAT grouping but with VAT consolidation model (3)
Source: Network Survey, PwC ITX Financial Services Network, October 2017
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VAT Grouping within the EUNumber of VAT Groups: not only FS industry
5
72
2675
120229
1120
91 103 136
3020
44 100 95
1460
158
0
500
1000
1500
2000
2500
3000
3500
AT BE CY CZ DK EE FI DE HU IE IT LV NL SK ES SE UK
AT BE CY CZ DK EE FI DE HU IE IT LV NL SK ES SE UK
Source: Fiscalis Seminar on Modernising of VAT Groups, 12-14 September 2016, Dublin
Mandatory VAT grouping regime Optional VAT grouping regime Limited to FS industry No data available
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VAT Grouping within the EUCJEU Skandia - VAT Expert Group
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• Recommendation (1/2)
• Importance of VAT grouping to the EU economy and single market should be recognised and should not be jeopardised
• Implementation of Skandia judgment should not hinder the role of VAT grouping in the EU and should secure the benefits of VAT grouping for both business and tax authorities
• Scope Skandia judgment and to be applied only to:
Transactions involving non-EU head offices or branches; VAT groups in the Member State with a narrow approach to
territorial scope; The Member State of the VAT group that has not implemented anti-
avoidance rules; Transactions involving externally bought services.
CJEU Skandia subgroup Branch A BUS head office
MSNon-EU
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VAT Grouping within the EUCJEU Skandia - VAT Expert Group
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• Recommendation (2/2)
• Anti-avoidance and anti-abuse measures to deal with situations of non-taxation in case of VAT Grouping;
• If recommendation not feasible => consider changing the VAT Directive.
CJEU Skandia subgroup
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VAT Grouping within the EUImplementation of CJEU Skandia
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Member States with official Skandia guidelines (9)
Member States with no VAT grouping (11)
Member states with no official Skandia guidelines (19)
Source: Network Survey, PwC ITX Financial Services Network, November 2017
Member States with VAT grouping (17)
VAT grouping but no guidelines : 9
VAT grouping and guidelines: 8
No VAT grouping but guidelines : 1
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VAT Grouping within the EUCurrent status VAT Grouping
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• Status:
• European Commission: paper on CJEU Skandia (N°845) ;
• VAT Expert Group paper: paper on CJEU Skandia (N°47/2015) ;
• VAT Committee: VEG paper discussed in the VAT Committee on 26 October 2015 (105th meeting) ;
• Fiscalis: meeting on “modernising VAT groups” (September 2016) ;
• VAT Committee: CJEU Skandia guidelines (December 2016) ;
• European Commission: paper on meaning of “financial, economic and organisational links” among VAT group members (N°918/2017) ;
• VAT Expert Group paper (work in progress): drafting of paper on meaning of “financial, economic and organisational links” among VAT group members (N°63).
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VAT Grouping: who’s next? Fast track implementation of VAT Grouping in Belgium
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Draft VAT
law /Royal
Decree no
55 /
Report to
the King
Approval
Council of
Ministers
Decision
Raad van
State /
Conseil
d’Etat
State of
the Union
Publication
(Belgisch
Staatsblad/
Moniteur
Belge
Amended
VAT Law
+ Royal
Decree no.
55 / Report
to the King
Preparation
draft
circulars
Preparation
draft
circulars
Start VAT
grouping
Go live date
of first
companies
11 Oct
2006
24 nov
2006
14 Dec
2006
15 nov
2006
6 Dec
2006
Jan/Feb
2007
13 March
2007
March
2007
1 April
2007
1 June
2007
Business
case
Benchmarking best practices and co-operative design and implementation – PwC / Bankers’ association
Sept
2006
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Contact persons
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Ine Lejeune
Partner, Tax Policy – Tax
Dispute Resolution – Tax
Litigation
T: +32 2 7107805M: +32 495 [email protected]
Lionel WielemansDirector, ITX FS
T: +32 2 7104460M: +32 477 [email protected]
Inge StuyverSenior Manager, ITX FS
T: +32 (0) 3 2593181M: +32 (0) 473 [email protected]
Thank you
© Law Square 2017 Your Law Square Team
Thank you for the attention