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.

1000

Related content

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

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG International has created a state of the art digital platform that enhances your experience, optimized to discover new and related content.