French Court Clarifies VAT Deduction Rules for Banks in Jurisprudence Letter No. 18 Decision

• The French Administrative Court of Montreuil issued Jurisprudence Letter No. 18 on May 30.
• The letter clarifies VAT deduction coefficients for banks.
• The case involved a French branch making home loans.
• The tax authorities found an error in excluding a corporate tax credit from the VAT deduction coefficient denominator.
• The court ruled the taxpayer was not entitled to a discharge of assessed VAT and late payment interest.
• Self-deliveries of fixed assets subject to VAT are excluded from turnover and the coefficient.
• The corporate tax credit compensates banks for forgone interest and is a subsidy linked to the transaction price.
• The credit is considered turnover for banks and included in the coefficient denominator.

Source: news.bloombergtax.com

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