New developments regarding the VAT exemption for funds

At a Glance

On 5 September 2024, the CJUE delivered a decision that may imply new developments regarding the VAT exemption for pension funds.

A closer look

On 5 September 2024, the Court of Justice of the European Union (CJUE) delivered its decision in the so-called “Dutch pension fund” cases.¹ The questions referred by the District Court of Gelderland to the CJUE are about the qualification of pension funds as investment funds as per Article 135.1.g) of the EU VAT Directive 2006/112 (implemented in Article 44.1.d) of the Luxembourg VAT law).

Firstly, the Court focuses on the question whether the beneficiaries could be considered as bearing the investment risk. Indeed, this is one of the conditions for an entity to be considered as an investment fund for VAT purposes.

The Court ruled that the beneficiaries bear the investment risk when their benefits (pension received after their retirement or capital paid at the time of the retirement) depend mainly on the result of the investments. The outcome is not solely determined by whether the risk is borne by individuals or a group (such as in bankruptcy) or by the employer providing a temporary guarantee of benefits. While these factors may be relevant, they alone do not determine the outcome.

In addition, the Court ruled that it is necessary to both assess if the pension fund is comparable to a UCITS (undertaking for collective investment in transferable securities ) and if it is comparable to other funds that are not UCITS but are regarded by the concerned Member State as special investment funds for VAT purposes.

If these criteria are met, a pension fund could benefit from exempt management services as investment funds, pursuant to Article 135.1.g) of the EU VAT Directive, implemented in Article 44.1.d) of the Luxembourg VAT law.

The Deloitte indirect tax team is at your disposal to discuss these questions further.

¹ Joined cases of X (C-639/22), Stichting BPL Pensioen (C-643/22), Stichting Bedrijfstakpensioensfonds voor het levensmiddelenbedrijf (BPFL) (C-644/22) v. Inspecteur van de Belastingdienst Utrecht and Fiscale Eenheid Achmea BV (C-640/22), Y (C-641/22) v. Inspecteur van de Belastingdienst Amsterdam and Stichting Pensioenfonds voor Fysiotherapeuten v. Inspecteur van de Belastingdienst Maastricht (C-642/22).

² Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities.