© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
H8. Finance exemptions
PAYMENTS, TRANSFERS, NEGOTIABLE INSTRUMENTS​
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Domestic law exemption
"1. The issue, transfer or receipt of, or any dealing with, money, any security for money or any note or order for the payment of money." (VATA 1994, Sch 9, Group 5, Item 1)
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EU exemption
"(d) transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection;" (Article 135)
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General ​
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- Purpose of exemption
XX
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- Not limited to supplies by certain types of person
"[78] It should be borne in mind that the transactions exempted under Article 13B(d)(3) of the Sixth Directive are defined in terms of the nature of the services provided and not in terms of the person supplying or receiving the service (see SDC, paragraphs 32 and 56, and Case C‑175/09 Axa UK [2010] ECR I‑10701, paragraph 26). Accordingly, the exemption is not subject to the condition that the transactions be effected by a certain type of institution or legal person where the transactions in question relate to the sphere of financial transactions (see, to that effect, SDC, paragraph 38, and Axa UK, paragraph 26)." (ATP PensionService A/S C-464/12)
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- Service must form a distinct whole fulfilling the specific, essential functions of service described
"[39] The transactions exempted under that provision are thus defined according to the nature of the services provided. In order to be regarded as exempt transactions the services in question must, viewed broadly, form a distinct whole, fulfilling the specific, essential functions of a service described in that provision (see judgment in Axa UK, C‑175/09, EU:C:2010:646, paragraphs 26 and 27 and the case-law cited)." (Hedqvist C-264/14)
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Transfer of money ​
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- Execution of order for transfer that changes legal and financial situation vis-a-vis bank(s)
"[79] The Court has held that a transfer is a transaction consisting in the execution of an order for the transfer of a sum of money from one bank account to another. It is characterised in particular by the fact that it involves a change in the legal and financial situation existing, on the one hand, between the person giving the order and the recipient and, on the other, between those parties and their respective banks; and, in some cases, between those banks. Moreover, the transaction which produces the change is solely the transfer of funds between accounts, irrespective of its cause (see, to that effect, SDC, paragraph 53, and Case C‑350/10 Nordea Pankki Suomi [2011] ECR I‑7359, paragraph 25)." (ATP PensionService A/S C-464/12)
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- Same financial institution moving money from current account to savings account included
"[80] That interpretation does not presuppose any particular method for effecting transfers, which may be done using accounting entries. That is so in the case of transfers between customers of a single bank, or between accounts of a single individual who acts as both the person giving the order and the recipient. At the hearing, ATP stated that, although the transfer of sums from a current account to a savings account belonging to the same account holder does not alter either the creditor or the amount of the debt, the terms and conditions relating to the debt owed to the bank will, by contrast, be altered. A transfer between two accounts belonging to the same account holder will be carried out using accounting entries, from which point new terms and conditions will apply to the debt in question.
[81] Such transactions, whether carried out by means of a physical transfer of funds or by means of accounting entries, are services which are covered by the exemption provided for in Article 13B(d)(3) of the Sixth Directive." (ATP PensionService A/S C-464/12)
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- Crediting funds to an investment/pension account included
"[82] As mentioned in paragraph 70 above, some of the services in respect of which eligibility for VAT exemption is contested in the case before the referring court, such as transactions crediting contributions paid into pension customers’ pension scheme accounts, are not of a purely technical nature but appear to establish the rights of pension customers vis-à-vis pension funds by transforming the claim held by a worker vis-à-vis his employer into a claim held by that worker vis-à-vis the pension fund of which he is a member." (ATP PensionService A/S C-464/12)
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- Transactions so closely linked as to transfer that it would be artificial to split
"[84] It is also for that court to assess whether, pursuant to the case-law referred to in paragraph 58 above, the other services provided by ATP are so closely linked to transactions crediting contributions paid into pension customers’ pension scheme accounts that they form, objectively, a single, indivisible economic supply, which it would be artificial to split." (ATP PensionService A/S C-464/12)
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Transactions concerning currency ​
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- Bitcoin exchange service is exempt
"[39] Consequently, it must be held that Article 135(1)(e) of the VAT Directive also covers the supply of services such as those at issue in the main proceedings, which consist of the exchange of traditional currencies for units of the ‘bitcoin’ virtual currency and vice versa, performed in return for payment of a sum equal to the difference between, on the one hand, the price paid by the operator to purchase the currency and, on the other hand, the price at which he sells that currency to his clients." (Hedqvist C-264/14)
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