• Service: Tax, Global Indirect Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 3/8/2013

Germany - CJEU confirms VAT-exempt outsourced investment advisory services 

March 8:   The Court of Justice of the European Union (CJEU) this week issued a judgment that advisory services concerning investment in transferable securities, provided by a third party to an investment fund management company, falls within the concept of “management of special investment funds” and therefore is covered by the value added tax (VAT) exemption under article 135(1)(g) of the Council Directive 2006/112/EC. GfBk Gesellschaft für Börsenkommunikation mbH, C-275-11 (7 March 2013)

Read the CJEU judgment


Under prior CJEU case law, services outsourced by a fund management company to a third party manager are covered by the VAT exemption “…if, viewed broadly, they form a distinct whole, and are specific to, and essential for, the management of those funds.

In the 7 March judgment, the CJEU followed the Advocate General`s opinion, which provided strong arguments in favor of the application of the VAT exemption to outsourced investment advisory services.

The CJEU held that advisory services concerning investment in transferable securities, provided by a third party to an investment management company, which is the manager of a special investment fund are within the concept of “management of special investment funds” for the purposes of the VAT exemption—even if the third party has not acted on the basis of a mandate within the meaning of the EU Directive for Undertakings for Collective Investments in Transferable Securities (UCITS).

KPMG observation

Tax professionals with the KPMG member firm in Luxembourg note that with this judgment, the CJEU is sending a “positive signal” to the investment fund industry and investors. They note that the Luxembourg fund industry may breathe a “sigh of relief” in that no additional VAT on outsourced investment advisory services would increase the final costs for investments.

Read a March 2013 report [PDF 59 KB] prepared by the KPMG member firm in Luxembourg: CJEU confirms VAT exemption of outsourced investment advisory services

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