This Directive sets out the method by which a Taxable Person must determine the value of a Deemed Supply of Services for the purposes of Article 37 of the VAT Law. The value is based on the total costs, both direct and indirect, on which Input Tax was incurred to make that Deemed Supply. Those total costs are calculated by first determining the open market value of the Services constituting the Deemed Supply, or the open market value of comparable Services where that value cannot be determined, and then excluding the profit element by dividing the open market value by (1 + the net profit margin). The net profit margin is taken from the Taxable Person's financial statements for the preceding financial year or, where it cannot be determined, from the average net profit margin prevailing in the sector in which the Taxable Person carries on its Business. The percentage of costs on which Input Tax was incurred relative to the total costs incurred during the previous financial year is then applied to the estimated total cost of the Services, and the resulting cost constitutes the value of the Deemed Supply of Services for the purposes of Article 37 of the VAT Law.