No turnover of foreign branch in local VAT pro rata deduction: outcome of Crédit Lyonnais case

The Court of Justice of the European Union (CJEU) released its judgment today in the Crédit Lyonnais case (C-388/11), finding that in determining the deductible proportion of VAT applicable, a company, the principal establishment of which is situated in a member state, may not take into account the turnover of its branches established abroad.

The main issue in the Crédit Lyonnais case is whether a company with branches outside the member state of its headquarters performing both activities that give rise to a VAT deduction right and activities that do not, can take into account the turnover of its foreign branches for the calculation of its input VAT-deduction right.

Crédit Lyonnais is a credit institution whose head office is located in France and which has branches within and outside the European Union. To calculate its deductible proportion of VAT for the period from 1 January 1988 to 31 December 1989, the head office of Crédit Lyonnais took into account interest arising under loans granted by it to its foreign branches…

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One Bishops Square
E1 6AD

Turnover (£m): 1,189.00
No. of lawyers: 2,304
Jurisdiction: UK
No. of offices: 11
No. of qualified lawyers: 273


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