Accueil Bank, Finance, Insurance

The French branch of Morgan Stanley UK carried out two kinds of activities: banking and financial services to its local customers (for which it opted for VAT) and services to its UK head office (for which the branch was booking transfers from its UK head office). The French Tax Authorities have challenged the VAT deduction for expenses inherent to services rendered to the UK head office.

An appeal was brought before the French Administrative Supreme Court by Morgan Stanley against the ruling of the Administrative Court of Appeal of Versailles of January 27, 2015. The Supreme Court overturned the Court of Appeal’s decision considering that the expenses incurred exclusively for internal operations with the head office are not outside of the scope of VAT and can lead to a VAT deduction right. However, the Supreme Court referred questions to the CJEU around the input VAT recovery ratio:

  • Should we take into account the branch’s input VAT ratio, the head office’s one or a combination of both when expenses are exclusively incurred for internal operations with the head office?
  • Which rules should apply in the particular case where the expenses incurred by the branch are both allocated to external and internal operations?

 

  • Michel Guichard

    Michel Guichard, as a Partner, was responsible for the Indirect Tax (VAT Customs) practice and then for the Tax Litigation…

  • Bertrand Jeannin

    Bertrand Jeannin, Partner, supplies strategic and technical advice to French and foreign multinational groups in all aspects of their VAT…

  • Nicolas Kazandjian

    Barrister registered with the Hauts-de-Seine Bar, he started my career in the indirect tax service line of Deloitte Société d’Avocats…

  • Vanessa Irigoyen

    With more than 16 years of experience, Vanessa has extensive expertise in the implementation of international efficiency business models for…

  • Anne Gerometta

    Anne Gerometta is Indirect Tax Partner of Deloitte Société d’Avocats. She advises international groups on their indirect tax issues. Anne…

  • Delphine Nicault

    Delphine Nicault is an Attorney-at-Law at the French Bar. She joined Deloitte in 2002 and assists her clients on day-to-day…