Netherlands: Pension fund management is not VAT-exempt | KPMG | GLOBAL
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Netherlands: Pension fund management is not VAT-exempt

Netherlands: Pension fund management is not VAT-exempt

The Supreme Court of the Netherlands (Hoge Raad) determined that pension funds with a defined benefit plan cannot be regarded as a special investment fund within the meaning of the value added tax (VAT) exemption. The management of this pension fund, therefore, is not VAT-exempt.


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The case concerned the VAT treatment of asset management services that a Dutch asset manager performed for an industry-wide pension fund for care and welfare sector employees. The pension fund administered the pension plan for employees in this sector. The pension payments (to be paid out) were calculated on the basis of the average salary earned by the employees and the length of service by their employer (a defined benefit pension plan).

The position taken by the asset manager was that the management services that it performed must be regarded as the management of a special investment fund and were VAT-exempt. This is also referred to as the VAT exemption for collective asset management.

The Supreme Court held that the investment risk (and the consequences thereof for the size of the pension benefits) was not significant enough to equate it with the risk borne by participants in a special investment fund. Agreeing with the findings of the lower court, the Supreme Court noted that the character of the pension fund was fundamentally different to that of an undertaking for collective investment in transferable securities (or UCITS).


Read a December 2016 report prepared by the KPMG member firm in the Netherlands: Management of pension funds with a defined benefit (DB) plan not VAT-exempt

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