- The UK’s Supreme Court ruled that loan services provided by Target Group Ltd to a bank were not exempt from VAT.
- The Supreme Court took a narrower interpretation of the VAT exemption for financial services than previous UK courts.
- The court stated that there must be “functional participation and performance” in the transaction for the VAT exemption to apply.
- Target provided loan servicing to a lender bank, including calculating fees, interest, and facilitating repayments.
- Target argued that its services were exempt from VAT under the payments exemption, but this argument was rejected.
- The Supreme Court followed the decision of the CJEU in Sparekassernes Datacenter v Skatteministeriet, which stated that the services must have the effect of transferring funds and changing the legal and financial situation between the parties.
- Target relied on a wider interpretation of the CJEU decision, but the Supreme Court rejected this interpretation.
Source: cadwalader.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
