The Court of Justice last Thursday handed down its judgments in C-607/14 Bookit and C-130/15 National Exhibition Centre, clarifying the application of the VAT payment and transfer exemption under Article 135(1)(d) of Council Directive 2006/112/EC. The decision has a bearing on the VAT treatment of card handling services.
In the first instance, the Court observed that the national court ought to consider whether the provision of such services was part of a single supply of tickets or constituted a separate service.
The Court went on to decide that an exchange of information between a trader and its merchant acquirer bank could not fall within the exemption. Collecting and sending cardholder details, receiving authorisation codes and sending authorisation codes and transaction data back to the cardholder bank via a merchant acquirer could not constitute a ‘specific and essential function’. Whether an authorisation code was obtained directly or through a merchant acquirer made no difference to the analysis. Further, Bookit and the NEC did not assume liability as regards changes in the financial and legal situation.
The decision at least partially undermines Bookit CA [2006] EWCA Civ 550 in which the Court of Appeal considered Bookit’s previous regime, which involved specifically transmitting card information and security information to its own bank without a merchant acquirer, as VAT exempt.
This article appears in the JHA May 2016 Tax Newsletter, which also features:
