Value-Added Tax

Computation Of The Prorate Of Deduction: Secondary Financial Products

The first decision of the E.C. Court of Justice relating to secondary financial operations likely to be excluded from the computation of the prorate has been made. The decision dated July 11, 1996 refuses the qualification as "secondary" for products of investment of funds of an estate management company.

The E.C. Court of Justice has indeed considered that article 19, paragraph 2, of the sixth VAT directive must be interpreted as the financial products received by an estate management company in remuneration of investments, realized for its own benefit, of funds paid by owners or renters, should be included in the denominator of the part used for the computation of the deduction prorate (CJCE, July 11, 1996).