The “Ins & Outs” of VAT in the Fintech Sector

The VAT treatment of FinTech services continues to test the boundaries of long-standing exemption provisions. While Articles 135(1)(b)–(g) of the VAT Directive provide exemptions for financial and insurance transactions, their application to modern business models, particularly electronic money institutions (EMIs), payment service providers (PSPs), and distributed ledger technology (DLT)-based services, requires a precise understanding of the underlying activities and the role of each operator in the value chain.

This session will examine how these exemptions operate in practice, focusing on the distinction between exempt financial services and taxable technical or administrative support. Particular attention will be given to payment flows, issuance and management of electronic money, and the extent to which services involving DLT assets may fall within (or outside) the scope of the exemption. The analysis will be grounded in established CJEU principles, which emphasise the need to assess the essential characteristics of a transaction rather than its contractual or technological form.

A dedicated part of the session will focus on properly identifying the nature of the transaction by reference to the relevant licensing frameworks issued by the Malta Financial Services Authority. This will highlight the importance of understanding what the business is actually authorised to do, and how this aligns with the VAT treatment. The session will demonstrate that regulatory classification, while not determinative, plays a key role in informing the VAT analysis.

Through practical examples, the session will demonstrate how similar-looking services can lead to different VAT outcomes depending on their functional role, level of involvement in the transfer of funds or risk, and degree of autonomy. The objective is to provide a structured approach to analysing FinTech transactions, allowing practitioners to identify where the exemption applies, and where it does not, based on substance rather than terminology.

SPEAKERS

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