Financial Services and VAT
In this case we are assisting a Finnish major service provider in banking sector in a landmark case with precedential effect where the services provided were assessed in terms of whether they would constitute distinct and independent VAT exempted financial function, or merely a technical / administrative one. This case has a significant EU-dimension, where we are essentially reflecting the recent European Court of Justice (“ECJ”) case C-41/18 Cardpoint.
Financial Services and VAT
In this case we are assisting a Finnish major service provider in banking sector in a landmark case with precedential effect where the services provided were assessed in terms of whether they would constitute distinct and independent VAT exempted financial function, or merely a technical / administrative one. This case has a significant EU-dimension, where we are essentially reflecting the recent European Court of Justice (“ECJ”) case C-41/18 Cardpoint.
Financial Services and VAT
In this case we are assisting a Finnish major service provider in banking sector in a landmark case with precedential effect where the services provided were assessed in terms of whether they would constitute distinct and independent VAT exempted financial function, or merely a technical / administrative one. This case has a significant EU-dimension, where we are essentially reflecting the recent European Court of Justice (“ECJ”) case C-41/18 Cardpoint.
Following an extensive VAT audit, in their re-assessment decision the Finnish Tax Administration (”FTA”) considered that the services supplied by the company were, for major part, not regarded as financial services referred to in Section 41 and 42 of the Finnish Value Added Tax Act and Article 135 section 1 subsection d of the Council Directive (2006/112/EC).
VAT was, therefore, imposed on certain services provided by the Company. Further, based on the decision the company would not be entitled to retroactive VAT deduction, enacted in the Finnish VAT Act, it had claimed for in the VAT Audit.
As an interesting tax procedural aspect, the company had also applied for preliminary ruling from the Finnish Central Tax Board on practically the same VAT matter subject to audit and decision. However, the Central Tax Board decided not to give ruling on the matter.
Based on the arguments made by the FTA, the company did not perform a distinct and independent financial service, but rather solely a technical / administrative procedure / service. Taken as a whole, the services re-assessed as subject to VAT did not, according to the FTA, fulfill the specific and essential functions of the VAT exempt financial services.
Further, by the FTA the European Court of Justice (“ECJ”) case C-41/18 Cardpoint (“Cardpoint”) was assumed as reflecting essentially the facts and circumstances present in the company’s VAT case, and seen, therefore, applicable in denying the exempt status of the services subject to VAT.
Considering the case Cardpoint, it is challenging to argue the Company’s case to be decided by the appellate body to the contrary, however. But this is very ambiguous, and of course appealed. What comes to the arguments by the FTA in denying the retroactive VAT deduction, they are also unprecedented, and now challenged in appeal.
All-in-all, the case has very significant importance both in terms of the financial interest included as well as in its grounds forming a precedent in Finnish national level as well as in the European Union.
Following an extensive VAT audit, in their re-assessment decision the Finnish Tax Administration (”FTA”) considered that the services supplied by the company were, for major part, not regarded as financial services referred to in Section 41 and 42 of the Finnish Value Added Tax Act and Article 135 section 1 subsection d of the Council Directive (2006/112/EC).
VAT was, therefore, imposed on certain services provided by the Company. Further, based on the decision the company would not be entitled to retroactive VAT deduction, enacted in the Finnish VAT Act, it had claimed for in the VAT Audit.
As an interesting tax procedural aspect, the company had also applied for preliminary ruling from the Finnish Central Tax Board on practically the same VAT matter subject to audit and decision. However, the Central Tax Board decided not to give ruling on the matter.
Based on the arguments made by the FTA, the company did not perform a distinct and independent financial service, but rather solely a technical / administrative procedure / service. Taken as a whole, the services re-assessed as subject to VAT did not, according to the FTA, fulfill the specific and essential functions of the VAT exempt financial services.
Further, by the FTA the European Court of Justice (“ECJ”) case C-41/18 Cardpoint (“Cardpoint”) was assumed as reflecting essentially the facts and circumstances present in the company’s VAT case, and seen, therefore, applicable in denying the exempt status of the services subject to VAT.
Considering the case Cardpoint, it is challenging to argue the Company’s case to be decided by the appellate body to the contrary, however. But this is very ambiguous, and of course appealed. What comes to the arguments by the FTA in denying the retroactive VAT deduction, they are also unprecedented, and now challenged in appeal.
All-in-all, the case has very significant importance both in terms of the financial interest included as well as in its grounds forming a precedent in Finnish national level as well as in the European Union.
Following an extensive VAT audit, in their re-assessment decision the Finnish Tax Administration (”FTA”) considered that the services supplied by the company were, for major part, not regarded as financial services referred to in Section 41 and 42 of the Finnish Value Added Tax Act and Article 135 section 1 subsection d of the Council Directive (2006/112/EC).
VAT was, therefore, imposed on certain services provided by the Company. Further, based on the decision the company would not be entitled to retroactive VAT deduction, enacted in the Finnish VAT Act, it had claimed for in the VAT Audit.
As an interesting tax procedural aspect, the company had also applied for preliminary ruling from the Finnish Central Tax Board on practically the same VAT matter subject to audit and decision. However, the Central Tax Board decided not to give ruling on the matter.
Based on the arguments made by the FTA, the company did not perform a distinct and independent financial service, but rather solely a technical / administrative procedure / service. Taken as a whole, the services re-assessed as subject to VAT did not, according to the FTA, fulfill the specific and essential functions of the VAT exempt financial services.
Further, by the FTA the European Court of Justice (“ECJ”) case C-41/18 Cardpoint (“Cardpoint”) was assumed as reflecting essentially the facts and circumstances present in the company’s VAT case, and seen, therefore, applicable in denying the exempt status of the services subject to VAT.
Considering the case Cardpoint, it is challenging to argue the Company’s case to be decided by the appellate body to the contrary, however. But this is very ambiguous, and of course appealed. What comes to the arguments by the FTA in denying the retroactive VAT deduction, they are also unprecedented, and now challenged in appeal.
All-in-all, the case has very significant importance both in terms of the financial interest included as well as in its grounds forming a precedent in Finnish national level as well as in the European Union.
Bernhardinkatu 5 A 5
00130 Helsinki, Finland
+358 40 523 2020
office@weckstromattorneys.com
© 2024 Weckström Attorneys Ltd.
Bernhardinkatu 5 A 5
00130 Helsinki, Finland
+358 40 523 2020
office@weckstromattorneys.com
© 2024 Weckström Attorneys Ltd.