VAT Treatment of Options and Option Premiums
Issue
There has been uncertainty regarding the VAT treatment of options supplied in return for premiums – specifically, whether they are exempt or taxable for VAT purposes. This Public Clarification clarifies the FTA’s views on this issue.
Summary
Supplies of options in respect of debt securities and equity securities in return for premiums are exempt from VAT.
Detailed discussion
What is an option and option premium:
A financial “option” gives the holder the right to buy or sell the underlying financial instrument at a specified price.
An “option premium” is the fee received for selling an option.
VATP014 – Public clarification – Option premiums Download the complete