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Eliminating VAT On Cost-Sharing Recharges

Peter Jenkins Head of Indirect Tax Ernst & Young considers the scope and potential of a mandatory exemption which has not yet been implemented in the UK
Hidden away among the 'social' exemptions in Article 13.A.1 of the Sixth Directive is a mandatory exemption which has been implemented in most of the Member States (but not the UK). This is beginning to attract attention in the UK as a possible quasi-grouping solution to the problem of manufactured VAT on cost-sharing arrangements between persons involved in joint ventures pursuing exempt or outside-the-scope activities both within Member States and cross-border. Possible beneficiaries include social welfare charities coming together to provide their services universities co-operating in research programmes and even financial institutions outsourcing functions to shared service centres or simply sharing common...

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