Which of the following is an exception to VAT payable?

• A. No VAT payable on commission for execution of a stock or market trade
• B. VAT on commission for execution of a stock trade is always payable
• C. VAT is never charged on financial services
• D. VAT is always charged on advice to clients

Answer: (A)

In VAT terms, supplies of financial services are generally exempt from VAT. The act of executing a stock market trade for a client is considered a financial service, so the broker’s commission for that execution falls outside the taxable supply. That’s why no VAT is charged on this particular service—the exception to the idea that VAT can apply to fees for such activities.

The other statements aren’t correct because they overstate the application of VAT to financial services or to investment advice. It isn’t accurate to say VAT is always payable on stock trade execution, nor that VAT is never charged on financial services in all cases, and it isn’t true that advice to clients is always charged with VAT.