Sparkasse, Ziraat and Nova banka are the banks that lost the dispute with the Indirect Tax Administration (ITA) in the first-instance proceedings before the Court of Bosnia and Herzegovina.
In addition to the aforementioned, Addiko, ASA banka, Atos, BBI, Intesa Sanpaolo, Unicredit, MF banka, NLB and Poštanska štedionica have disputes with the ITA. The dispute was initiated after the ITA in 2023 started charging VAT on bank commissions for card payments for the first time.
The subject of the dispute are commissions in the total amount of 43 million KM, that is, the collection of VAT in the total amount of 100 million KM. In the ITA they refer to the Law on VAT, while the banks believe that the collection of this VAT is not based on the law.
After the verdict against the three banks, they announced themselves from the Association of Banks of Bosnia and Herzegovina. In the submitted reaction, Klix.ba primarily emphasized the chronology of this case, considering it important for understanding why they claim that VAT cannot be charged on bank commissions for card payments.
“The ITA has continuously, for more than a decade, controlled the VAT obligations of banks, which also applies to the services of card houses. In that period, the ITA never requested the calculation of VAT on these services, nor did they consider them taxable. Moreover, on several occasions, including in 2019, they gave written opinions, in which they clearly stated that the services of card houses are not considered subject to VAT, considering that they are part of the provision of financial services, i.e. payment transactions”, they pointed out.
But, as they add, in 2023 there were controls, without being announced, of public interpretation or changes to the relevant regulations. Then, as they claim, the Administration suddenly changed its long-standing position.
“Banks were asked to pay VAT on the services that foreign card companies provide as part of the card system, not only for future periods, but also retroactively – for several previous years, which led to different treatment between banks and further threatened legal security,” they pointed out.
They assure that this has caused concern in the banking sector, considering, as they reiterated, that no element of the factual or legal framework has been changed (neither the VAT Law), nor the method of providing card services, nor the role of banks in payment transactions.
They are of the opinion that the only change that took place was the one in the interpretation of the ITA, without, as they add, being grounded in the law. They explained in more detail why commissions should not be separately taxed.
“Banks in Bosnia and Herzegovina consider that the services of card houses are undeniably of a financial nature. According to Article 25 of the VAT Law, financial services are all services related to the execution of payment transactions, and precisely these services are necessary for clients to be able to pay by card. Payment transactions without the infrastructure and process support of card houses are simply not possible, so these services should be considered part of payment transactions, that is, financial services exempt from VAT,” indicated the Association of Banks.
Consequently, as they stated, the arguments that the ITA refers to in an effort to prove that it is the so-called technical services are not based in law, nor were they relevant in the previous decades of application of those regulations.
As what made the situation even more complicated, they pointed out the initiation of misdemeanor proceedings against the banks and responsible persons, although the banks, as they claim, acted in accordance with the VAT Law, the previously published opinion of the ITA and its many years of practice.
They also pointed out that in all those cases, the courts rejected those misdemeanor charges and confirmed that there is no misdemeanor liability of the banks, which established the unfoundedness of the ITA’s actions. For the Association of Banks of Bosnia and Herzegovina, such court epilogues are a clear confirmation of the justification of the banks’ legal position.
“Despite this practice, the Court of Bosnia and Herzegovina ruled in several administrative proceedings, which confirmed the position of the ITA. Banks in Bosnia and Herzegovina do not question court decisions. They have always fully respected and executed all court decisions, which they will continue to do, but they do not agree with the positions of this judgment because it deviates from the provisions of the VAT Law, long-standing administrative practice and the principle of legal certainty,” they said.
They announced that the banks will use all legal means, including an appeal before the Appellate Division of the Court of Bosnia and Herzegovina and, if necessary, initiate proceedings before the Constitutional Court of Bosnia and Herzegovina in order to protect, as they stated, legal certainty, equal treatment of all taxpayers and consistent application of the law. They also said that they remain firmly committed to transparent, legal and responsible business.
They assessed that legal certainty, predictability and consistency in their application are conditions for the stability of the financial system and investor confidence. They called on all competent institutions to be guided by those principles when making future decisions in order to preserve the stability of the financial sector and the overall business environment in the country.
We remind you that there is a possibility of an increase in consumer prices if the judiciary in a final procedure rules in favor of the ITA, because it is likely that this will cause an increase in commissions on bank commissions for card payments, it says Klix.
