VATcodexEU VAT case law · Court of Justice and General Court

Transactions in securities EU VAT case law

8 cases of the Court of Justice and the General Court of the European Union on this point of VAT law, from 2001 to 2017.

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Under each case, what the Court decided, from its summary. The summaries are AI-generated and are not official documents: open the case for the Court’s own text.

C-615/16 Kerr

Order · 21 November 2017 · Portugal

When an intermediary's activity counts as negotiation of securities transactions

Ruling by reasoned order, the Court held that the concept of negotiation is capable of covering such an activity, provided that it is the activity of an intermediary remunerated for supplying a service to one of the parties to a contract relating to financial transactions in securities, that the service consists in doing what is necessary for the seller and the buyer to sign that contract, that the intermediary does not itself sign the contract, and that in any event it has no interest of its own in its content. Whether those conditions are met is for the referring court to verify. The conditions restate CSC Financial Services and Volker Ludwig in a compact form, and they are the checklist to run through for any introducer or broker.

C-264/14 Hedqvist

Judgment · 22 October 2015 · Sweden

VAT treatment of bitcoin exchange transactions

The exchange transactions are supplies of services for consideration. Bitcoin is not tangible property, having no purpose other than to serve as a means of payment, and the margin is direct consideration. They are exempt under Article 135(1)(e), which is not confined to legal tender but extends to non-traditional currencies accepted by the parties as an alternative to legal tender with no purpose other than as a means of payment. Articles 135(1)(d) and (f) do not apply. Bitcoin is neither an instrument transferring money nor a security.

C-461/12 Granton Advertising

Judgment · 12 June 2014 · Netherlands

VAT treatment of discount cards

Neither of the two exemptions applies to the sale of such a card. The card gives no ownership right, no claim against the issuer, has no nominal value and cannot be exchanged for money or goods, so it is not comparable to the securities listed and its sale is not a financial transaction. Nor is it a payment instrument. It does not transfer money, unlike payments, transfers and cheques. Use of the card is a price discount excluded from the affiliated business's taxable amount under Article 11(A)(3)(b), not a payment. Issuers of discount and loyalty cards must account for VAT on the full consideration received from consumers, the taxable amount being simply the card price.

C-44/11 Deutsche Bank

Judgment · 19 July 2012 · Germany

VAT treatment of discretionary portfolio management

The two elements are indispensable, of equal footing and so closely linked that they form objectively a single economic supply which it would be artificial to split. Neither is ancillary. Because the supply must be assessed as a whole, and exemptions are construed strictly, it does not fall within Article 135(1)(f), and it is not management of a special investment fund under Article 135(1)(g) since the client retains ownership of individual securities. Article 56(1)(e) is nonetheless wider than Article 135(1)(a) to (g) and covers portfolio management as a financial transaction. Discretionary individual portfolio management is taxable in full.

C-259/11 DTZ Zadelhoff

Judgment · 5 July 2012 · Netherlands

Brokerage on share sales of property-owning companies

The exemption applies. Transactions designed to transfer, and which do transfer, shares are exempt share transactions even though in the final analysis they concern the immovable property held by those companies and its indirect transfer. The objective character of the transaction actually carried out governs, whatever the vendor's initial intention. The exclusion in the second indent is not applicable where the Member State has not exercised the Article 5(3)(c) option. Brokerage aimed at bringing the parties together, the broker having no interest of its own in the terms, is exempt "negotiation". Confirms that fee income of real estate brokers, corporate finance intermediaries and advisers on share deals in property-holding companies is exempt, with the input VAT consequences that follow, in Member States that have not enacted the Article 5(3)(c) equivalent (now Article 15(2) of the VAT Directive).

C-350/10 Nordea Pankki Suomi

Judgment · 28 July 2011 · Finland

Electronic messaging services for financial institutions and the finance exemptions

Those services do not fall within either exemption. The services are supplied for consideration and are taxable. They merely transmit information and do not themselves effect any transfer of funds or securities, so they produce none of the legal and financial changes characterising an exempt transaction. That an element is essential, or the only one available on a market, is not enough. The supplier's contractual responsibility, however large in money terms, covered only secure and legible transmission, so it was technical and not specific and essential. Confirms that outsourced infrastructure supporting payments and securities settlement is taxable unless the provider assumes responsibility for the specific, essential elements of the financial transaction.

C-540/09 Skandinaviska Enskilda Banken

Judgment · 10 March 2011 · Sweden

VAT treatment of share issue underwriting guarantees

The Court held that such an underwriting guarantee is a supply for consideration within the Directive's scope and is exempt under Article 13B(d)(5) as a transaction in securities. Conclusion of the guarantee is of itself liable to create, alter or extinguish rights in ownership of shares, and that potential is sufficient. Whether the issue was ultimately fully subscribed is irrelevant. A distinction on that basis would breach fiscal neutrality. The other exemptions were not examined. The guarantee was treated as a stand-alone service in Sweden. Banks and other credit institutions providing underwriting or standby commitments on equity issues can treat the commission as exempt, with the corresponding restriction on input tax recovery.

C-235/00 CSC Financial Services

Judgment · 13 December 2001 · United Kingdom

Scope of the exemption for transactions and negotiation in securities

"Transactions in securities" means transactions liable to create, alter or extinguish the parties' rights and obligations in respect of securities. Merely physical, technical or administrative services which leave the legal and financial position unchanged fall outside, even if essential to the exempt transaction. "Negotiation" means a distinct act of mediation by an intermediary who is not a party to the contract. A subcontractor performing clerical formalities for one party occupies that party's position and is not negotiating. The touchstone is alteration of legal and financial position, not indispensability.

Related topics

Exemptions · Transactions concerning deposit and current accounts · Supply of services · Other exemptions · Supply of goods or services · Place of supply