Pro Rata Deduction by Entities Established in Several VAT Jurisdictions

The principles for determining proportional deduction of VAT (pro rata) by legal entities that are established in more than one VAT jurisdiction give rise to uncertainty under EU law. More specifically, the issue is whether the pro rata in each VAT jurisdiction where the entity is established must be calculated on the basis of the entity’s total (Unionwide or worldwide) turnover or on the basis of turnover that is derived by the part of the legal entity that is established in the VAT jurisdiction in question. The ECJ is to answer that question and related questions in Société Le Crédit Lyonnais. In this article, the author discusses various aspects of the issue.