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EUCJ Case C-44/11: General Advocate’s opinion - 21/05/2012


Discretionary portfolio management services EUCJ Case C-44/11 “Deutsche Bank” - General Advocate’s opinion

On 8 May 2012, the General Advocate gave her opinion in the case C-44/11 “Deutsche Bank” which concerns the VAT treatment of discretionary portfolio management services for individual investors.

In the case at hand the individual investors authorised Deutsche Bank to manage an investment portfolio on their behalf, based on a predefined investment strategy.  Once authorised, Deutsche Bank invested the funds and made all the decisions using its own discretion (and without any further approval from the client).
In the opinion of the General Advocate such portfolio management services form a single service for VAT purposes that cannot benefit from VAT exemption as a financial service (Article 44 LTVA). Therefore such services should be taxable.

On this basis, if the individual private investors are established within the EU (“B2C”), these services should be subject to VAT where the provider is established.

However, if these services are provided to individual private investors established outside the EU, the provider should not charge any VAT on such services.

The AG’s opinion is in line with the current practice in Luxembourg and thus is not surprising. We believe that the AG’s opinion is a good indication on how the Court of Justice of the European Union will decide. The final decision in the case is expected to be made before the end of 2012.

In practice, on a case by case basis and based on the outcome of the Case, Luxembourg managers would have to review and (potentially) update their current contractual arrangements with their clients.



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