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Global Tax 50 2014: Skandia

ECJ judgement

 Skandia

Skandia is a new entry this year

The ECJ case hinged on the supply by Skandia America Corporation(SAC), a US company without an establishment in the EU, of IT services purchased by SAC from a third party to the company's Swedish branch, Skandia Sverige (SKS), which had joined a Swedish VAT group. VAT was not applied to the costs charged by SAC to SKS, a position disputed by the Swedish tax authorities, and the question was referred to the ECJ. Following the principles of FCE Bank (2006), the taxpayer argued that the supplies from SAC to SKS should be disregarded for VAT purposes as cross-border supplies of services from a company to its EU branch. The ECJ, however, said the services were not a supply from SAC to its branch (SKS), but rather, for VAT purposes, were a supply from SAC to the VAT group to which the branch (SKS) belonged. Therefore the supplies were taxable and the Swedish VAT group of which SKS was a member must account for the VAT due.

The judgement caused huge concern among financial services taxpayers, which benefit from certain VAT exemptions, because of their frequent use of branches to conduct overseas business and of VAT groups to minimise VAT leakage.

There is still a lack of clarity on how member states will apply the ECJ's decision. Some national authorities have issued brief statements pointing out that their VAT grouping rules differ from Swedish VAT grouping rules (as the UK authority did in October) but taxpayers remain in wait-and-see mode. Financial services taxpayers, in particular, will not have welcomed the uncertainty-inducing influence the Skandia casehas had during 2014.

The Global Tax 50 2014

View the full list and introduction

Gold tier (ranked in order of influence)

1. Jean-Claude Juncker  2. Pascal Saint-Amans  3. Donato Raponi  4. ICIJ  5. Jacob Lew  6. George Osborne  7. Jun Wang  8. Inverting pharmaceuticals  9. Rished Bade  10. Will Morris


Silver tier (in alphabetic order)

Joaquín AlmuniaAppleJustice Patrick BoyleCTPAJoe HockeyIMFArun JaitleyMarius KohlTizhong LiaoKosie LouwPierre MoscoviciMichael NoonanWolfgang SchäubleAlgirdas ŠemetaRobert Stack


Bronze tier (in alphabetic order)

Shinzo AbeAlberto ArenasPiet BattiauMonica BhatiaBitcoinBonoWarren BuffettECJ TranslatorsEurodadHungarian protestorsIndian Special Investigation Team (SIT)Chris JordanArmando Lara YaffarMcKessonPatrick OdierOECD printing facilitiesPier Carlo PadoanMariano RajoyNajib RazakAlex SalmondSkandiaTax Justice NetworkEdward TroupMargrethe VestagerHeinz Zourek

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