Binding General Ruling 62 – VAT implications of securities lending arrangements

12 December 2022

The Binding General Ruling concludes that securities lending arrangements constitute “financial services” envisaged in section 2(1)(f), the supply of which is exempt under section 12(a). The scrip-lending fee due by the borrower constitutes consideration for an exempt supply, and is therefore not subject to VAT.

Practice Note 5/1999 “Tax Implications for Lending Arrangements in respect of Marketable Securities”, deals with VAT consequences for a lender in respect of these arrangements. The provisions of the Practice Note are withdrawn with effect from 1 April 2023 and replaced with this binding ruling.

Vendors that have charged VAT on any scrip-lending fee, are required to account for the VAT accordingly. However, should the provisions of section 21 be met, credit notes may be issued, and adjustments made under section 21(2), read with section 16(3)(a)(v), (b)(iii) and 16(2)(a).

You can read Binding General Ruling 62 here.