CPD Boost: VAT treatment of Card Handling Fees


Many of you will be aware that litigation on the VAT treatment of debit and credit card handling fees has been rumbling on now for well over a decade. It is hoped that the issue will finally be resolved following the reference of questions to the ECJ seeking clarification on whether the fees qualify to be treated as a VAT exempt payment processing service or are actually a service that is subject to VAT.

The issue centres around what factors are necessary to distinguish a service which consists of the provision of financial information without which a payment cannot be made but which does not fall within the exemption, from a data handling service which functionally has the effect of transferring funds and which the Court of Justice has previously identified as therefore being capable of falling within the exemption.

The questions referred include:

  • Does the exemption apply to such services which result in a transfer of funds but which do not include the task of making a debit to one account and a corresponding credit to another account?
  • Does entitlement to the exemption depend on whether the service provider itself obtains authorisation codes directly from the cardholder’s bank, or alternatively obtains those codes via its merchant acquirer bank?


The key cases on this are Bookit Limited, National Exhibition Centre Limited and Way Ahead Group Limited.

The full tribunal decisions are available here:


The ECJ references for Bookit Limited and National Exhibition Centre Limited can be viewed here:


Finally getting certainty on this issue will be most welcome particularly by businesses in the leisure and travel sectors where these fees are commonly charged.