UK concerned EU Vat ruling may prove costly for banks

UK authorities are examining whether the country needs to apply an EU court ruling that could add hundreds of millions of pounds of taxes to banks and insurers.

Vat can be levied on services supplied by a head office outside the EU to a unit in the 28-nation bloc, the EU’s top court said yesterday. Sweden has the right to tax Skandia America for providing information technology services to a Swedish unit as the branch is seen as a separate entity in respect to vat, the Court of Justice said.

UK tax authorities are “considering whether the judgment has any application to UK grouping provisions, which are different to those in Sweden”, said Michel Rubini, a spokesman for UK Revenue and Customs.