Statement, as delivered by Chancellor Rishi Sunak, on 9 November 2020, that from 1 January 2021, businesses will be able to reclaim input VAT attributable to the export of certain financial services products to the EU (as is already the case for those exports to non-EU countries).
The UK has decided to extend the specified supplies order so that relevant financial supplies to EU counterparties will give the right to the recovery of associated UK VAT on costs after the transition period ends on 31 December 2020. The EU will be treated the same as non-EU countries are now.
Ostensibly this change would reduce UK VAT costs for clients related to the supply of otherwise VAT exempt banking and insurance services supplied to EU counterparties, and UK to UK intermediary supplies where the supply arranged by the UK intermediary is made to an EU recipient. This will cost the Treasury a lot of money in additional VAT recovery, but presumably the hope is that this will be countered by the boost to the UK economy this change will lead to.
Fund management services are not included in the specified supplies order – but there may still be some upside in respect of distribution and order execution, global custody etc.
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