VAT – Special Investment Funds
The ECJ has given a preliminary ruling as to whether the exemption from VAT for the ‘management of special investment funds’ within Article 13B(d)(6) Sixth Council Directive 77/388/EEC extends to the management of the underlying properties of a real estate fund. Case C-595/13 Fiscale Eenheid X N.V. concerned a fiscal group (FEX), of which one of the members, A Beheer BV, provided management services to several pension funds for the purchase, sale and exploitation of real estate. The Dutch courts referred two questions to the ECJ.
The first was whether a special investment fund can include a real estate fund. The ECJ held that there was nothing in the definition of ‘special investment funds’ that limited investments by ‘type’. In principle, a real estate fund is therefore capable of qualifying for the exemption. The ECJ did, however, hold that the fund must be subject to State supervision and must demonstrate the characteristics necessary to place it in direct competition with other forms of investment.
The second was whether the term management included the actual management of the company’s real estate, which the company has entrusted to a third party. The ECJ held that the term management only covers transactions ‘specific’ to the business of the special investment fund. This would include the purchase and sale of the immovable property, but not the actual management of the properties because that is not ‘specific’ to the business of the fund.
This article appears in the JHA December 2015 Tax Newsletter, which also features:
