German VAT on special fund management

Wed 13th Mar 2013

Last week, it was confirmed that managers of special investment funds in Germany were not liable to charge German VAT on their services.

The ruling was passed down by the European Court of Justice, the highest court of appeal in Europe for VAT (and many other areas).  It confirms current German tax legislation as being in accordance with the EU VAT Directive article 135(1)(g).

The services under question were the outsourced advisory services for the investment in transferable shares and debt instruments.  It contrasts with another ruling last week that held that the outsourced management of pension funds did not qualify for the VAT exemption.  The decision, UK HMRC vs Wheels (Ford Pension Fund), confirms that Defined Benefit Pensions are not like Investment Trusts, and so not entitled to VAT exemption under the EU VAT Directive (ECJ JP Morgan Fleming 2007 case)