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Flashback on ECJ/CJEU cases – Processing of debit and credit card payments exempt from VAT? (Bookit C-607/14, NEC C-130/15, Cardpoint C-42/18)

The key question posed to the CJEU is whether the services performed by Bookit and NEC qualify as “transactions concerning payments and transfers”, which are VAT-exempt.


Questions C-607/14

With regard to the exemption from VAT in Article 135(1)(d) of Council Directive (EC) 2006/112/EC1 of 28 November 2006 on the common system of VAT as interpreted by the Court of Justice in Case C-2/95 Sparekassernes Datacenter (SDC) v Skatteministeriet (ECLI:EU:C:1997:278; [1997] ECR I-3017), what are the relevant principles to be applied in determining whether or not a “debit and credit card handling service” (such as the service that is supplied in this case) has “the effect of transferring funds and entail[s] changes in the legal and financial situation” within the meaning of paragraph 66 of that judgment.

As a matter of principle, what factors distinguish (a) a service which consists in the provision of financial information without which a payment would not be made but which do not fall within the exemption (such as in C-350/10 Nordea Pankki Suomi (ECLI:EU:C:2011:532; [2011] ECR I-7359), from (b) a data handling service which functionally has the effect of transferring funds and which the Court of Justice has identified as therefore being capable of falling within the exemption (such as in SDC at paragraph 66)?

In particular, and in the context of debit and credit card handling services:

Does the exemption apply to such services which result in a transfer of funds but which do not include the task of making a debit to one account and a corresponding credit to another account?

Does entitlement to the exemption depend on whether the service provider itself obtains authorisation codes directly from the cardholder’s bank, or alternatively obtains those codes via its merchant acquirer bank?


Decision C-607/14: Article 135(1)(d) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that the exemption from value added tax provided for therein for transactions concerning payments and transfers is not applicable to a ‘card handling’ service, such as that at issue in the main proceedings, supplied by a taxable person, the provider of that service, where an individual purchases, via that service provider, a cinema ticket which the service provider sells for and on behalf of another entity, and which the individual pays for by debit card or by credit card.

Decision C-130/15: Article 13B(d)(3) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment must be interpreted as meaning that the exemption from value added tax which is provided for in that article in respect of transactions concerning payments and transfers does not apply to a service described as ‘processing of payment by debit or credit card’, such as that at issue in the main proceedings, carried out by a taxable person, the provider of that service, where an individual buys, via that provider, a ticket for a show or other event which the provider sells in the name and on behalf of another entity, which that individual pays for by debit or credit card.

Decision c-42/18:  Article 13B(d)(3) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment must be interpreted as meaning that services supplied to a bank operating cashpoints, consisting in operating and maintaining those cashpoints, replenishing them, installing computer hardware and software necessary to read the data from bank cards, sending a cash withdrawal authorisation request to the bank which issued the bank card used, providing the cash requested and registering withdrawal transactions, do not constitute a transaction concerning payments which is exempt from value added tax for the purposes of that provision.

It does not constitute an operation related to payments, exempt as such, the provision of services to a bank that operates ATMs consisting of making function and maintaining ATMs, supplying them with banknotes, installing computer equipment and programs to read the data of bank cards, transmit the requests for authorization to withdraw cash to the bank that issued the used bank card, proceed to deliver the requested cash and record the withdrawal operations.

Sources Bookit & NEC

Newsletters on Bookit C-607/14

Newsletters on NEC C-130/15

Newsletters on Cardpoint C-42/18

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