A VAT payment or a VAT refund?

VAT legislation on payment services dates back to the 70s and has not been updated since. At the same time, payment services have become increasingly varied, international and complex. In practice, it is not always easy to apply antiquated VAT legislation to the ever-changing environment in which payment services operate. The legislation on payment services is also in a constant state of flux. The implementation of European legislation in respect of the Single Euro Payment Area (SEPA) has an impact on the entire Dutch environment for payments. For example, national systems for debt collection and bank transfers will disappear pursuant to the new legislation. In an environment where many market players have no, or only a limited entitlement to recover VAT, the VAT treatment is vital. It is these parties, in particular, that need to check whether outsourced activities can be exempted from VAT.

The advisors of Meijburg & Co’s Indirect Tax Financial Services group have extensive experience in not only identifying the VAT risks confronting payment service providers, but also the VAT opportunities available to them.

Recurring issues in the area of payment services are:

  • clearing and settlement by clearing and settlement institutions;
  • cash pooling;
  • online payment services
  • credit and debit card payments;
  • vouchers and alternative methods of payment;
  • the management of loan portfolio’s.

VAT legislation on payment services is outdated and therefore difficult to apply to current payment services. The Indirect Tax Financial Services Group is well aware of the challenges facing this sector and their impact on VAT. We would be pleased to help you examine how these issues relate to your specific situation. If you would like more information on the VAT position of financial institutions in general, please click here to download our fact sheet ‘VAT in the financial sector’. If you would like more information on the VAT position of payment institutions and similar service providers, please click here to download our fact sheet on ‘VAT and payment services’.

If you would like to read more about our general services provided to clients in the financial sector, please click here.