§ Dawn Primarolo
Following the judgment of the European Court in the First National Bank of Chicago case, policy is that all foreign exchange transactions are supplies of services. Where these transactions take place within the EU, the services are exempt from VAT and therefore taxpayers are not able to recover the VAT incurred on related costs. Where the transaction is with a party belonging outside the EU, however, the VAT incurred is recoverable. The recoverable amount is determined on a basis agreed between the taxpayer and Customs.