New developments regarding the VAT exemption for funds

At a Glance

On 14 March 2024, the advocate general of the Court of Justice of the European
Union (CJEU) delivered conclusions that may suggest new developments regarding the VAT exemption for funds.

A closer look

On 14 March 2024, the advocate general of the Court of justice of the European Union (CJEU) delivered her conclusions in the so-called “Dutch pension fund” cases.¹ The questions referred by the District Court of Gelderland to the CJEU are about the qualification of pension funds as investment funds under Article 135.1.g of the EU VAT Directive 2006/112 (implemented in article 44.1.d) of the Luxembourg VAT law). If answered positively, they could benefit from exempt management services, similar to investment funds. After lengthy and somewhat complex developments, Ms. Kokott proposes to the Court to answer the questions submitted to its appraisal by the referring Dutch tribunal as follows: “(…) an investment fund,  (…), is a fund which mostly fulfils the criteria set out in the first sentence of Article 1(2) of Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities. This requires, in particular, that the investment fund is open to the public, that there is a redemption obligation similar to that for a UCITS and that investors bear a comparable investment risk. The latter condition depends essentially on whether the pension commitment provides primarily for guaranteed benefits or benefits dependent on the performance of the invested capital.”

In addition, she opines that “(...) in the case of funds which are not UCITS, it must be assessed not only whether they are comparable to UCITS but also whether they are comparable to other funds that are not UCITS but are regarded by the Member State as special investment funds. The Member State may exempt the management of such special investment funds with due regard to the principle of fiscal neutrality [we underline] (…).”

Considering the usual delays of the Court, we could expect its decision, which may imply new developments regarding the application of the VAT exemption for funds, in around six months.

The Deloitte indirect tax team is at your disposal to discuss these questions further.

¹Joined cases of X (C-639/22), Stichting BPL Pensioen (C-643/22), Stichting Bedrijfstakpensioensfonds voor het levensmiddelenbedrijf (BPFL) (C-644/22) v. Inspecteur van de Belastingdienst Utrecht and Fiscale Eenheid Achmea BV (C-640/22), Y (C-641/22) v. Inspecteur van de Belastingdienst Amsterdam and Stichting Pensioenfonds voor Fysiotherapeuten v. Inspecteur van de Belastingdienst Maastricht (C-642/22).