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Europe: VAT – Option to tax in the financial world

The benefits and disadvantages of opting in for VAT

Regulated financial services are generally exempt from VAT for historical, policy and technical reasons, including the disproportionate cost for individuals with no entitlement to VAT recovery, and the difficulty in identifying the consideration for many such services. The application of an exemption gives rise to significant complexity with respect to determining the nature of the services supplied, the applicable VAT rate and the impact on input tax recovery.

Source Baker & McKenzie

 

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