Volume 46 (2018) / Issue 11

Charlène A. Herbain, 'Case law note: ECJ Confirms Function-Based Approach to the VAT Exemption of Transactions Concerning Payments and Transfers' (2018) 46 Intertax, Issue 11, pp. 930–933


On 25 July 2018, the Court of Justice of the European Union (ECJ or the Court) rendered its judgment in the DPAS1 case, in which it examined the concept of ‘transaction concerning payments or transfers’ and the VAT exemption applicable thereto. 

While VAT exemptions have existed since the inception of VAT in the Union3 and the scope of VAT exemptions – in particular, that applicable to transactions concerning payments or transfers – has been explored by the ECJ on many occasions,4 this referral shows that doubts linger. With the advent of the Revised Payment Services Directive,5 new service providers, especially financial technology (FinTech) businesses, operating outside the banking system render services connected to transfer and payment; and make this case a timely one.

This case note identifies and reflects upon the criterion used by the Court to reject the classification as ‘transaction concerning payments or transfers’ within the meaning of the VAT exemption provided by the VAT Directive. It also highlights significant points (some which were ignored by the ECJ) and evaluates these findings, thereby calling into question the correctness of the conclusion reached by the ECJ.

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ISSN: 0165-2826
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