Loans interests received by a bank from its branches abroad may be analyzed as internal movements of cash insofar as the branches and the head-quarter are considered as only one legal person. As long as the sums received by the bank are not paid by a third party in return for rendered services, the corresponding revenues remain outside the field of application of VAT and are thus excluded from the two elements of comparison used for the computation of the percentage of deduction (Administrative Court of Appeal of Paris, October 5, 1995).
The Court also stated that provisional percentage of deduction can be determined depending on the estimated revenues of the current year only in case of change of the situation of the taxpayer from a VAT viewpoint.
The Administrative Court of Appeal confirms, in the present case, the administrative decision according to which the possibility to compute the percentage of deduction depending on the estimated revenues of the current year can only be used in case of change of the situation of the taxpayer from a VAT viewpoint.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be brought about your specific circumstances.
For additional information contact Claire Acard on 33/(1)/55 61 10 10, Lionel Benant on 33/22.214.171.124 or Joel Fischer on 33/126.96.36.199 or enter text search: 'ARCHIBALD ANDERSEN' and 'Business Monitor'. The members of ARCHIBALD ANDERSEN Association d'Avocats (S.G. Archibald and Arthur Andersen International) are registered with the Hauts-de-Seine Bar and the Lyon Bar.
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