ECJ - Recent Developments in Value Added Tax

S. 278I. CJEU case Nordea Pankki Suomi Oyj

A. Introduction

The Nordea Pankki Suomi Oyj (‘Nordea’) case, decided by the Court of Justice of the European Union (CJEU), is very important for defining the scope of the VAT exemption with regard to financial services.

The question referred to the CJEU related to whether the services provided by SWIFT (Society for Worldwide Interbank Financial Telecommunication) were exempt for VAT purposes, and whether Nordea Bank could claim a refund of the output VAT relating to the services received from SWIFT.

B. Issue

Nordea is a Finnish merchant bank that handles both retail and corporate banking. Its banking activities include purchase and brokerage of securities and currency, and it also offers investment and fiduciary services. Within the framework of said activities, it purchased services from SWIFT. SWIFT manages a worldwide electronic messaging service for financial institutions, enabling these financial institutions to exchange standardized financial messages through SWIFT’s international secure data exchange network.

As a result of the reverse charge method, Nordea paid the VAT due on those services. However, as Nordea’s bank activities are (mostly) VA...