Commissioners of Customs and Excise v First National Bank of Chicago: ECJ 14 Jul 1998

The Bank dealt in foreign exchange, not charging a commission, but relying on the profit it made over a period between the prices at which respectively it bought and sold the currency. The Bank contended that the foreign exchange transactions were subject to VAT as supplies effected for a consideration and that the value of the consideration was the full value of the currency received in exchange for that provided by the Bank. The European Court held that the supply of foreign currency being legal tender was not the supply of tangible property, but of a service. The supply of foreign currencies in the way described was the provision of a service for consideration being the difference between what it paid and what it received for the currency. The currencies received by the Bank were not the remuneration it received. That consisted in what the Bank could keep for itself, calculated as the net result of all transactions over a given period of time. Trading in foreign currencies where no charge was made, but the company relied upon the spread did constitute provision of taxable supplies. Amount of consideration was the total spread of transactions over a period of time
Europa Foreign exchange transactions, performed even without commission or direct fees, are supplies of services provided in return for consideration, that is to say supplies of services effected for consideration within the meaning of Article 2(1) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes. More particularly, transactions between parties for the purchase by one party of an agreed amount in one currency against the sale by it to the other party of an agreed amount in another currency, both such amounts being deliverable on the same value date, and in respect of which transactions the parties have agreed (whether orally, electronically or in writing) the currencies involved, the amounts of such currencies to be purchased and sold, which party will purchase which currency and the value date, constitute supplies of services effected for consideration within the meaning of Article 2(1) of the Sixth Directive.
2 Article 11A(1)(a) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes must be construed as meaning that, in foreign exchange transactions in which no fees or commission are calculated with regard to certain specific transactions, the taxable amount is the overall result of the transactions of the supplier of the services over a given period of time. Article 11A(1)(a) of the Sixth Directive provides that the taxable amount is, in respect of supplies of services, that which constitutes the consideration which has been or is to be obtained by the supplier from the purchaser for such supplies. Determining the consideration comes down to determining what the bank in question receives for foreign exchange transactions, that is to say the remuneration on foreign exchange transactions which it can actually take for itself.
Times 20-Jul-1998, C-172/96, [1998] EUECJ C-172/96
Bailii
Sixth Council Directive 77/388/EEC May 1977
European
Cited by:
CitedNell Gwynn House Maintenance Fund v Commissioners of Customs and Excise HL 15-Dec-1998
Trustees who managed a group of apartments argued that they did not themselves provide staff services to the tenants, but rather arranged for the staff to provide services to them.
Held: The contract providing cleaning and other services, by a . .

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Updated: 08 April 2021; Ref: scu.161869