LME could face turbulence over VAT dispute

In late January the European Commission referred the UK to the European Court of Justice (ECJ) over concessions offered by the EU to the UK in 1977, which effectively allowed the UK to apply a zero rate of VAT to transactions on specific commodity markets.  The dispute centres on the Commission’s view that the UK has overstepped its mark and that VAT on market orders in terminal markets, such as the LME, should be subject to VAT to keep a level playing field with other countries in the EU. As well as the LME, the EU action covers the ICE Futures Europe exchange and the London Platinum and Palladium Market (LPPM). While the outcome of the Brexit negotiations are still clouded by uncertainty, the dispute between the UK and the EU over VAT may have important consequences for the LME.