Post Brexit VAT and the financial services sector

Suppliers of financial services to EU customers will be able to recover VAT on their costs from 1 January 2021 as rules will align with non-EU 27 providers. Kevin Hall, partner at Wright Hassall, explains

The financial services sector is an integral and successful part of the UK economy. Under current legislation financial service providers are not able to recover the VAT paid on costs attributable to supplies in the UK or to EU customers, which therefore becomes a cost to the business; whereas that same VAT is recoverable if it is attributable to supplies made to customers outside the EU.

Some draft legislation in the lead up to Brexit gave the impression that the status quo would remain.

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