ECJ C-58/20 (K) & C-59/20 (DBKAG) – Judgment – Tax work and use of software provided to investment fund management companies are VAT exempted

On June 17, 2021, the ECJ issued its decision in the cases C-58/20 (K) & C-59/20 (DBKAG).

Context: Submission for a preliminary ruling – VAT – Directive 2006/112/EC – Art. 135(1) – Tax exemptions – Management of special assets – Outsourcing – Services of a third party

Article in the EU VAT Directive

Article 135(1)(g) of Directive 2006/112/EC

Article 135
1. Member States shall exempt the following transactions:
(g) the management of special investment funds as defined by Member States;


C-58/20: The Finanzamt Linz case concerns administrative services comprising the calculation of yields for tax purposes.

C-59/20: The DBKAG case concerns the making available of IT software used for risk management and performance measurement.


C-58/20: Must Article 135(1)(g) of Directive 2006/112/EC be interpreted as meaning that the term ‘management of special investment funds’ also covers the tax-related responsibilities entrusted by the management company to a third party, consisting of ensuring that the income received by unit-holders from investment funds is taxed in accordance with the law?

C-59/20: Must Article 135(1)(g) of Directive 2006/112/EC 1 be interpreted as meaning that, for the purposes of the tax exemption provided for by that provision, the term “management of special investment funds” also includes the granting by a third-party licensor to an investment management company (‘IMC’) of a right to use specialist software specifically designed for the management of special investment funds where, as in the case in the main proceedings, that specialist software is intended exclusively to perform specific and essential activities in connection with the management of the special investment funds but runs on the technical infrastructure of the IMC and can perform its functions only subject to the minor participation of the IMC and subject to ongoing recourse to market data provided by the IMC?

AG Opinion



Article 135(1)(g) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that the provision of services by third parties to management companies of special investment funds, such as tax-related responsibilities consisting in ensuring that the income received from the fund by the unit-holders is taxed in accordance with national law and the grant of a right to use software which is used exclusively to carry out calculations which are essential for risk management and performance measurement, fall within the scope of the exemption provided for in that provision if they are intrinsically connected to the management of such funds and if they are provided exclusively for the purpose of managing such funds, even if those services are not outsourced in their entirety.

Personal comments/VATupdate 

Tax services and provision of software for a special investment fund are exempt from VAT if they are services specifically tailored for such funds

  • Two Austrian operators provided certain services to investment fund management companies.
  • The first provided tax services. These consisted of the correct calculation of the tax liabilities (where the management company acted as a tax remittent of tax due from investors).
  • The latter provided software for calculations relevant to risk management and profitability measurements. The software was tailored for investment fund operations.
  • The taxpayers claimed that their services were exempt under Article 135(1)(g) of the VAT Directive (exemption for the management of special investment funds).
  • The tax authorities argued that these were not services fulfilling “the specific, essential functions of the management of special investment funds”.
  • The Court spoke in line with the taxpayers’ expectations. It held that:
    • Exempt fund management services must have 2 characteristics: 1) they must form a distinct whole and 2) they must fulfill “the specific, essential functions of the management of special investment funds.”
    • As to the first condition, the Court points out that it is not necessary that the management function is outsourced in its entirety (it need not be a “whole” management service to be exempted).
    • As to the second premise, the Court indicated that:
    • The tax services should be in “inseparable connection with the activity of managing the fund” and be provided solely for the purpose of managing such funds (and should not be the same as tax services provided to other entities).
    • The provision of software should be provided solely for the purpose of managing special investment funds and not for the management of other funds.


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