Press Release: VAT: The European Commission proposes to modernise the current legislation for financial services and insurances

The European Commission has adopted a proposal for a Directive aiming at modernising and simplifying the complex VAT rules for financial and insurance services and securing a level playing field in the pan-EU market for these services as far as VAT is concerned. These services are generally exempt from VAT but the exemption dates from 1977 and the legislation has not kept abreast of developments since then. Today, the exemption is not applied uniformly by the Member States and thus frequently the European Court of Justice has been asked to fill the legislative gap and clarify the correct interpretation. The proposal will create more certainty and security for Member States and for financial and insurance institutions by setting clear modern definitions of exempt services. It will also allow these institutions to manage the costs of non deductible VAT by allowing them to opt for taxation and by clarifying and extending the tax exemption for cost sharing arrangements.

• Primary Source

European Commission: MEMO/07/519: Modernising VAT rules applied on financial and insurance services – Frequently Asked Questions http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/07/519&format=HTML&aged=0&language=EN&guiLanguage=en

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