Commenting on the ruling by the European Court of Justice (ECJ) that the collection of monthly payments from patients by AXA and their transfer to dentists under the Denplan arrangements is not a VAT exempt financial service, Stephen Morse, tax partner, PwC, said: “[This] unexpected decision creates significant uncertainty. This will throw a spanner in the works for many financial services firms’ outsourcing plans as it has the potential to increase outsourcing costs by up to 20%, at a time when the sector is already under significant cost pressure.
This decision could well make the difference between outsourcing being cost-effective or not.
“The whole financial services sector urgently needs to understand how today’s announcement will impact their existing business models and cost base across the European Union. Firms will also need to closely monitor how different member states interpret and apply this landmark decision going forward,” he added.
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