VAT and the City

What is VAT and the City?

VAT and the City refers to the VAT treatment of supplies of financial services. The City of London is a global hub for financial services, hence the reference to VAT and the City.

The financial services exemption from VAT

The supply of specified financial services are exempt from UK VAT where certain conditions are satisfied. The UK VAT exemption for financial services is based on the relevant provisions of Directive 2006/112/EC (the VAT Directive). These have been enacted into UK law by group 5 of Schedule 9, Part II to the Value Added Tax Act 1994 (VATA 1994), which sets out the details of the items falling within the exemption.

When the UK ceased to be an EU Member State on 31 January 2020, it entered an implementation period (IP), during which it continued to be treated as a Member State for many purposes, and remained bound by EU law. The IP ended at 11 pm on 31 December 2020. On that date, a body of EU-derived rights and legislation, known as retained EU law (REUL), was converted into

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