In a letter dated 3 May 2021, Germany’s federal Ministry of Finance (MOF) updated its positions regarding the VAT treatment of services provided by exchanges for financial products. The letter clarifies that the same principles that apply to services provided by traditional stock exchanges also apply to services provided by other trading platforms for financial products, e.g., for virtual currencies. Based on the letter, more platform operators (including operators of a “decentralized exchange,” described further below) should be able to invoke the VAT exemption for financial services; specifically, the exemption under section 4(8) of the German VAT Act that applies to sales of financial products and the brokerage of such transactions. Other clarifications in the letter indicate that ancillary services, such as information technology (IT) services, may be considered as part of a single supply of services that is VAT exempt, rather than as independent taxable services; the clarifications may require operators to make changes to their invoicing by 1 July 2021.
Source Deloitte
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