Russia extends financial services VAT exemption
The Russian VAT office has extended the range of financial services subject to the Value Added Tax exemption.
Russia regards core financial services, including banking and insurance, as outside of the scope of its VAT regime. The latest confirmation widens this relief to include services provided by brokers, fund managers, pension funds, exchanges and traders of: share and bond securities, foreign currencies and commodities.
This new ruling will come into place from 1 January 2015.
EU VAT exemption on banking and insurance
The EU member states also regard financial services as VAT exempt. This was because in the 1970’s, when the original VAT Directive was drawn up, it was concluded that designing a practical VAT regime that applied across the whole supply chain would be too complex. As recently as 2010, the European Commission attempted to introduce an EU Financial Services VAT Directive. But arguments over the scope of the tax put it on hold. Since then, the European Commission has backed 11 states with a Financial Transaction Tax.