Towards a generalization of the Global Employment Contract to take over from the IGP?
Financial Services - connected?
In May 2017, the CJEU9 released a judgment concerning the Luxembourg Independent Group of Persons (IGP) model. Recently, three other judgments were released excluding the use of IGP for the insurance, banking and financial sector. These judgments will heavily impact actors of the financial sector which were used to share resources using this mechanism. Are Global Employment Contracts the new solution to mitigate VAT costs?
In 2014, the Commission of the European Union (EU) considered that Luxembourg’s rules implementing the IGP system in Luxembourg were not in line with the EU principles and consequently decided to take Luxembourg to the CJEU, Case C-274/15. IGP is commonly used by banking, insurance or financial groups established in Luxembourg to manage VAT costs on the sharing of resources between different entities. Due to this CJEU judgment, such institutions need to look for a Plan B. The implementation of Global Employment Contracts is seen as an interesting option.