- The Supreme Court clarified VAT deduction rules for market makers trading financial instruments, especially regarding input VAT recovery for mixed costs (PESM) when counterparties are both inside and outside the EU.
- The Court confirmed that the First National Bank of Chicago method for determining taxable amounts in foreign exchange transactions may also apply to securities transactions under similar circumstances.
- The Court allowed for flexible, reasonable estimates to determine the place of establishment of counterparties when individual identification is not possible, provided the data is accurate and reliable.
- The Court questioned whether transfer pricing payments from foreign group companies should be included as turnover for VAT recovery purposes and referred this issue for further analysis.
- Market makers should reassess their current PESM and allocation methods in light of this judgment.
Source: pwc.nl
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.
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