Brokerage services in the provision of credit granting services and VAT

In art. 43 of the Act on tax on goods and services (hereinafter: the VAT Act), a fairly extensive catalog of activities for which the legislator has applied tax exemption has been included. Among them, one may mention brokerage services in the provision of credit or loan granting services. The purpose of this article is to present the assumptions that entitle you to benefit from the VAT exemption.

What is brokerage?

The provisions of the VAT Act do not contain a legal definition of "brokerage". However, this term appears in the regulations that relate to the exemption from this tax. According to the wording of Art. 43 sec. 1 point 38 of the VAT Act, the services of granting loans or cash loans and intermediation services in the provision of loans or cash loans, as well as the management of loans or cash loans by a lender or lender are exempt from tax.

On the other hand, the dictionary definition of "brokerage" indicates that it is the activity of a third party aimed at communication between the parties or settling some matters concerning both parties, as well as associating contractors in commercial transactions and enabling contact between labor market participants.

Mediation and jurisprudence

Brokerage services have been widely discussed in the jurisprudence of Polish courts and by the Court of Justice of the European Union (hereinafter: the CJEU), which examines the compliance of, inter alia, implementation of EU directives into the national legal order.

In the judgment of the CJEU of June 21, 2007, file ref. Case C-453/05 in the case of Volker Ludwig v Finanzamt Luckenwalde, it was stated that: “(...) intermediation is a service rendered to a party to the contract for which it pays remuneration as a separate agency activity. In this context, the purpose of such activity is to do everything necessary for the two parties to conclude the contract, with the intermediary having no interest in the content of the contract (...). On the other hand, there is no activity consisting in intermediation if one of the parties to the contract subcontracts some of the actual activities related to the contract ".

In turn, in the judgment of the CJEU of December 13, 2001, file ref. case C-235/00, in the case of Commissioners of Customs & Excise v. CSC Financial Services Ltd., it was ruled that the provision of brokerage services is the case of an entrepreneur who is not a party to a contract relating to a financial product. Mediation is a kind of mediation, and its aim is to do everything possible within the law for the parties to conclude a contract.

Against the background of Polish legislation, the content of the judgment of the Supreme Administrative Court of June 26, 2013, file ref. I FSK 923/12, which states: "The purpose of the services provided by the applicant is to associate two parties and lead to the conclusion of a contract between the user and the financial institution. Since the user, after familiarizing himself with the offer of financial institutions presented by the applicant, can choose a product appropriate for him and either buy it or express interest in it, the created it is possible to contact a financial institution and purchase its product.

In the opinion of the Supreme Administrative Court, by such an action the company meets the condition, resulting from the above-mentioned judgments of the CJEU, to do everything necessary for the two parties to conclude the contract, and the company itself, as an intermediary, has no interest in the content of the contract. Therefore, it should be considered that, in the presented facts, the company provides financial intermediation services which are exempt from VAT. "

In the same judgment, the Supreme Administrative Court added that: “(...) services consisting in the presentation and the possibility of getting acquainted with the offer of financial institutions, and in the case of interest in a product of a given financial institution, providing the user with the possibility of contacting an advisor or the possibility of downloading, filling and submitting an application, and then concluding a contract and purchasing a given financial product , constitute intermediary services in the provision of financial services specified in art. 43 sec. 1 points 37-41 of the Act of March 11, 2004 on tax on goods and services (...) “.

Taking into account the EU and Polish jurisprudence, the intermediation service should be characterized in particular by the following features:

• its overriding goal is to conclude a contract,
• the service is provided to the client for which the client pays the remuneration,
• the brokerage service and the main one must be perceived by the client as a whole, and the brokerage service should be specific to the financial service.

In addition, it should be noted that the activities performed by an intermediary cannot constitute only technical and administrative activities related to the granting of loans or credits. An example of a technical activity is, for example, merely collecting customer data and transferring them to the bank without any purpose of concluding a loan agreement.

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The jurisprudence and doctrine do not make the provision of intermediation services conditional on the actual conclusion of a contract with a given financial institution and the tax exemption is not conditioned on the result of the service provided - obtaining a loan or a loan by a customer at a bank institution. However, each case requires an individual approach to a given factual state.