Preliminary questions asked to the CJEU, « Morgan Stanley » case

The French branch of Morgan Stanley UK carried out two kinds of activities: banking and financial services to its local customers (for which it opted for VAT) and services to its UK head office (for which the branch was booking transfers from its UK head office). The French Tax Authorities have challenged the VAT deduction for expenses inherent to services rendered to the UK head office.

An appeal was brought before the French Administrative Supreme Court by Morgan Stanley against the ruling of the Administrative Court of Appeal of Versailles of January 27, 2015. The Supreme Court overturned the Court of Appeal’s decision considering that the expenses incurred exclusively for internal operations with the head office are not outside of the scope of VAT and can lead to a VAT deduction right. However, the Supreme Court referred questions to the CJEU around the input VAT recovery ratio:

  • Should we take into account the branch’s input VAT ratio, the head office’s one or a combination of both when expenses are exclusively incurred for internal operations with the head office?
  • Which rules should apply in the particular case where the expenses incurred by the branch are both allocated to external and internal operations?


Michel Guichard

Michel Guichard, Partner, leads the Indirect Tax activity. With more than 30 years’ experience in International and French Tax law, he advises his clients on indirect tax matters. Michel is […]

Odile Courjon

Odile Courjon, Partner, has developed a strong expertise in indirect tax issues (VAT, wage taxes, excise taxes, export control and customs) in France and overseas. She advises her clients in […]

Bertrand Jeannin

Bertrand Jeannin, Partner, supplies strategic and technical advice to French and foreign multinational groups in all aspects of their VAT and customs policies. Major focuses of Bertrand’s input involve the […]

William Stemmer

William Stemmer, Partner, has more than 15 years’ experience in Indirect Tax matters. William particularly specializes in the real estate and financial sectors. William is a lecturer at the University […]

Nicolas Kazandjian

Barrister registered with the Hauts-de-Seine Bar, he started my career in the indirect tax service line of Deloitte Taj in 1999. My current position is Director. My area of expertise […]

Vanessa Irigoyen

Vanessa has joined Deloitte France in 2002 and she is the partner leading the French indirect Tax Practice. For more than 18 years, she advises multinational companies on their global […]

Anne Gerometta

Anne, Director, has been advising companies on indirect tax issues for more than 15 years. Anne has developed a specific expertise on the manufacturing sector (VAT, customs and Export Control) […]