Commissioners of Customs & Excise v First National Bank of Chicago.
Date: 1998-07-14
25 On this question, the Court observes first of all that the currencies which are exchanged against other currencies in a foreign exchange transaction cannot be regarded as `tangible property' within the meaning of Article 5 of the Sixth Directive, since money used as legal tender is involved.  Foreign exchange transactions are thus supplies of services within the meaning of Article 6 of the Sixth Directive.
26 With regard, second, to the question whether services are supplied for consideration, the Court has already held that a supply of services is effected `for consideration' within the meaning of Article 2(1) of the Sixth Directive, and is therefore taxable, only if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, the remuneration received by the provider of the service constituting the value actually given in return for the service supplied to the recipient (Case C-16/93 Tolsma v Inspecteur der Omzetbelasting [1994] ECR I-743, paragraph 14).
27 Only where a person's activity consists exclusively in providing services for no direct consideration is there no basis of assessment and the services are therefore not subject to VAT (Tolsma, cited above, paragraph 12).
28 In the present case, it cannot be disputed that a bilateral legal relationship exists between the Bank and its counterparty under which the two parties to the transaction give reciprocal undertakings to transfer amounts in a given currency and to receive the countervalue in another currency.
29 Apart from the actual exchange transaction, the service provided by the Bank is characterised by the Bank's preparedness to conclude such transactions in the currencies in which it specialises.
31 Moreover, any technical difficulties which exist in determining the amount of consideration cannot by themselves justify the conclusion that no consideration exists.
33 To hold that currency transactions are taxable only when effected in return for payment of a commission or specific fees, which would thus allow a trader to avoid taxation if he sought to be remunerated for his services by providing for a spread between the proposed transaction rates rather than by charging such sums, would be a solution incompatible with the system put in place by the Sixth Directive and would be liable to place traders on an unequal footing for purposes of taxation.
44 Determining the consideration therefore comes down to determining what the Bank receives for foreign exchange transactions, that is to say the remuneration on foreign exchange transactions which it can actually take for itself (see, in this regard, Case C-38/93 Glawe v Finanzamt Hamburg-Barmbek-Uhlenhorst [1994] ECR I-1679, paragraph 9).
48 It should be borne in mind in this regard that, in the case of transactions which are effected for consideration but the actual consideration for which depends on future factors such as passage of time, the Court has already ruled that the taxable amount must be defined on the basis of, in particular, the interest accrued over a deferred payment period, which was not yet known when the taxable transaction was concluded (Case C-281/91 Muys' en De Winter's Bouw- en Aannemingsbedrijf v Staatssecretaris van Financiën [1993] ECR I-5405, paragraph 18).
49 Nor is it necessary for either the taxable person supplying the goods or performing the service or the other party to the transaction to know the exact amount of the consideration serving as the taxable amount in order for it to be possible to tax a particular type of transaction (Case C-288/94 Argos Distributors v Commissioners of Customs and Excise [1996] ECR I-5311, paragraphs 21 and 22).  Consequently, it does not matter that when the transaction is concluded the parties do not know the basis on which VAT will be charged and that it remains unknown, even afterwards, to the recipient of the service.