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VAT exemption for investment advisory services for funds? - 9/11/2012


ECJ Case follow-up : C–275/11 GfBk VAT exemption for investment advisory services for funds?

On 8 November 2012, the General Advocate Pedro Cruz Villalón published his opinion in the case C–275/11 GfBk Gesellschaft für Börsenkommunikation.


This case focuses, in particular, on the possible application of VAT exemption for investment advisory services provided by GfBk to a company managing the respective fund. Within this role GfBk (i) advised in the management of a fund and (ii) constantly monitored the fund and made recommendations for the purchase and sale of fund assets. When advising the fund GfBk is also required to comply with the principles of risk diversification, statutory restrictions and investment restrictions.

The recommendations were communicated to the management company phone, fax or over the internet. The management company, after checking whether they contravened any statutory limits, implemented them.

General Advocate’s opinion

In his written opinion, the General Advocate (“AG”) summarized the conditions for VAT exemption of the management of funds within the meaning of the EU VAT Directive. Based on this the services provided by a third party manager “must, viewed broadly … form a distinct whole, and [be] specific to, and essential for, the management of those funds”. From this definition the AG derives certain criteria that have to be met in order to apply for the VAT exemption. This criteria includes (i) the specific function of the outsourced services for the management of the funds, (ii) the autonomy of the outsourced service and (iii) continuity of the service. From the perspective of the AG the first condition is met (i.e. investment advisory services are specific and essential for the management of investment funds) and it is up for the national court to decide whether the condition of autonomy and continuity is also fulfilled. Furthermore, for the purpose of considering the VAT exemption for the management of funds it should not
be relevant whether the outsourced services lead to a change in the financial and legal position of the fund.

Considering how the background of the dispute is described, in our view, the AG is rather in favour of the VAT exemption of such investment advisory services (subject to the confirmation of the two characteristics of a VAT exempt management service) – even though not explicitly mentioned in the opinion.

We would like to emphasize that AG’s opinion is used by the Court as a guidance and is not legally binding. The final decision of the Court should come in the beginning of the year 2013.



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