Luxembourg: VAT exemption for investment funds; implications for UCITS

Luxembourg: VAT exemption for investment funds; UCITS

The Court of Justice of the European Union (CJEU) issued a judgment finding that the value added tax (VAT) exemption for the management of “special investment funds” applies also to regulated funds—and may further apply for real estate funds—but that actual property management of such funds is excluded from the VAT exemption.

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The judgment was issued on referral of questions from the Dutch Supreme Court. Read a summary discussion of the CJEU judgment in TaxNewsFlash-Europe

Implications for UCITS

The CJEU found the term “special investment fund” is to be interpreted so as to prevent discrepancies among the EU Member States on the application of VAT to such investment vehicles. In this respect, collective investment undertakings within the meaning of the UCITS directive (and any other funds that have comparable features for them to be in competition with UCITS) would fall within the scope of the VAT exemption. 

The CJEU took the position that under the VAT directive, special investment funds—to have characteristics identical to those of UCITS—must be subject to a specific state supervision. This position follows the approach taken for years in Luxembourg.

 

Read a December 2015 report [PDF 137 KB] prepared by the KPMG member firm in Luxembourg: VAT Update

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