Brussels to tackle VAT anomalies

Article reports that the European Commission will put forward a proposal in December 2007 to reduce the problem of “hidden” value-added tax for banks and insurers.

The measures to update the 30-year-old law which exempts financial services from VAT are designed to tackle inconsistencies and reduce the costly headache of non-recoverable tax. This arises because banks and insurers do not have to charge VAT for the services they provide, while they must pay VAT on the products and services that they themselves buy.