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The EBF welcomed the Commission proposal for a Directive aimed at modernising and simplifying the current VAT-regime for financial and insurance services.
The EBF notes that the current VAT rules for financial services are one of the most important remaining obstacles to the efficient operation of a Single Market for financial services. The package addresses the two main areas of concern currently facing the financial services industry, EBF notes. These are need to modernise the outdated VAT legislation and the lack of neutrality in the current system that cascades the impact of irrecoverable VAT expense through the commercial supply chain.
“The EBF wishes the proposal to go further in modernising the legislation in order to correctly address today’s banking activities and be flexible enough to include new activities as they develop. Greater certainty should in particular be established around the areas of the provision of payments services, derivatives, securities, custodial services and intermediaries”, Guido Ravoet, Secretary General of the EBF said.
As regards VAT neutrality, the industry regrets that the proposals do not guarantee the right for financial services to organize under a harmonized “VAT group” regime, which would allow them to share best practices and to integrate their core functions without incurring additional VAT-costs.