Bank key

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In Germany, the bank key is used in the Value Added Tax Act (UStG) to designate a distribution key for the deduction of input taxes in banks , which is determined in accordance with Section 15 (4) of the Value Added Tax Act . It determines the distribution of the costs that cannot be directly allocated between the transactions that are subject to VAT and those that are not.

background

Banks are exempt from sales tax in core areas of their business . The reason is that banks have no " turnover " in the lending and deposit business , but rather generate a margin that corresponds to the difference between debit and credit interest. This gross margin is neither sales nor profit. It serves to cover the risk costs (e.g. loan default) and administrative costs (personnel and material costs) of the bank and is the source of its profit. Banks are therefore difficult to classify in the logic of VAT . In return, input tax deduction is generally not possible.

Only a very small part of the banking business is subject to sales tax; sales tax can be opted for for certain parts . An example of the existing VAT liability is the deposit business or, as another service of the bank, the safe deposit box. Here, the custody fees are sales within the meaning of the law, because they represent payment for a service. As a consequence, the input taxes on this are deductible here.

However, since 98% of the material costs of a bank must be regarded as overhead costs and no direct allocation can take place, a distribution key is required for these. A part is assigned to the normal lending and deposit business (consequence: no input tax deduction) and another part to the business subject to sales tax (consequence: input tax deduction). The input tax deduction is divided into directly allocable costs (e.g. purchase of a safe deposit box) and the costs that cannot be directly allocated. A distribution key, the so-called bank key, is used for the costs that cannot be allocated directly.

The VAT option only applies to transactions with entrepreneurs who are entitled to deduct input tax. In doing so, the bank decides to declare the transactions with these companies as subject to VAT. Thus, all costs (interest, fees, commissions) are subject to sales tax. This does not cause them any disadvantage, as they can claim the third-party sales tax as input tax and in return pay sales tax to the tax office. In this way, the bank can increase the percentage of the input tax deduction, as this is based on the amount of the output sales that are subject to VAT. This is associated with a lot of effort for the bank, but helps to reduce costs in the long term and thus also to keep costs for customers stable.

Legal position

Up until 1991, Section 208 (4) of the Sales Tax Guidelines 1988 described a method specifically for credit institutions for dividing the input tax amounts of these overheads. Afterwards, the allocation was made either according to the ratio of the income of the respective areas or according to the fees for these services.

The bank key was not adopted in the 1992 sales tax guidelines. Without an official regulation, the general regulations of Section 15 (4) UStG and Sections 207–210 of the 1992 sales tax guidelines apply. According to this, the estimate of the proportion of non-deductible input tax must be carried out appropriately, for example in accordance with the operational cost and performance accounting.

In doing so, the bank turns some of its output services into services subject to VAT within the meaning of the Value Added Tax Act. This means that part of the sales tax paid by the bank to suppliers can be claimed as input tax . This means that the bank can claim input tax in the amount of the taxable sales. The provisions of Section 15 (4) UStG provide the necessary legal framework with the wording "The entrepreneur can determine non-deductible partial amounts by means of an appropriate estimate." In order to avoid misunderstandings and to specify the provisions of the implementing regulation, the Federal Ministry of Finance published a letter on April 12, 2005 . It explains the implementation of the sales tax option in banks, the so-called "new bank key", in more detail. In § 9 UStG, the legislator also gives the possibility that according to § 4 sales exempt from sales tax, if they are made to entrepreneurs, can also be declared as subject to sales tax.

In the 6th VAT System Directive of the European Union , the bank key is a subset of the pro rata rate .

Web links

literature

Klinker, Philipp: Restriction of the right to input tax deduction by credit institutions as a result of the sales taxation of financial services . Dissertation Heinrich-Heine University Düsseldorf, 2010.

Individual evidence

  1. See Antje Weber: Sales taxation of financial services of banks and financial institutions , dissertation Universität Nürnberg-Erlangen 2004, page 116 , queried on July 2, 2010
  2. Letter from the German Federal Ministry of Finance of April 12, 2005, file number IV A 5 - S 7306 - 5/05 New concept for the division of the input tax deduction at credit institutions according to Section 15 (4) of the Value Added Tax Act (UStG)