Looking back @2021 #12: Poland and France to introduce optional taxation of Financial Services – Exemption may not longer be applied

Per art. 135(1)(b) to(g) of the EU VAT Directive 2006/112/EC, the EU Member States shall allow an exemption for financial services. However, per art. 137(1)(a), Member States may allow taxable persons a right of option for taxation in respect of financial transactions.

France and Poland will offer the optional taxation of financial services. Together with the implementation of VAT grouping in these countries, the optional taxation of financial services may be an incentive for financial institutions having operations in France and Poland.

In 2021, the European Union launched a consultation on ”VAT rules for financial and insurance services” and also already published the results of the consultation.

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Some of the newsitems on www.vatupdate.com related to this development:

European Union

• EU financial and insurance services VAT review: Results of public consultation
• Public consultation on ”VAT rules for financial and insurance services”
• Why the EU’s VAT exemption on insurance and financial transactions may need revising

France

• France to loosen financial services option for VAT changes
• Budget 2022: Payability of VAT on supplies of goods, Option to tax for financial services
• Option to tax for financial services—a newly “free choice” option

Poland

• Polish Order signed: Optional taxation of financial services, VAT grouping
• Attracting capital and investors to Poland: VAT coverage of financial services
• VAT aspects of Poland’s proposed tax reform discussed: VAT grouping, Taxation of financial transactions, Quick VAT refunds for non-cash taxpayers
• Poland allows financial institutions to apply VAT to financial services per January 2022

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Check also the previous articles on ”Looking back @2021”

1. Brexit
2. E-Commerce VAT Directive launched in the EU per July 1, 2021
3. Next to the EU, 14 countries implemented VAT on E-Commerce, another 7 will implement in 2022
4. Saudi-Arabia is the first country in the Middle East launching E-Invoicing, UAE may follow
5. The concept of Fixed Establishments remains a major risk, and even why?
6. Intrastat: Major updates applicable as of Jan 1, 2022
7. Implementation/changes E-Invoicing & Real Time Reporting during 2021
8. ECJ cases decided in 2021 on ”Taxable Amount”

9. Increased focus on Fighting Climate Change – Carbon tax

10. 49 ECJ VAT Cases decided (incl. orders) in 2021
11. Split Payments