The Advocate General (A-G) at the European Court of Justice (ECJ) concluded that Dutch pension funds likely don’t qualify as ‘common investment funds,’ meaning their purchased (asset) management services are subject to VAT. This decision stems from the debate over whether pension funds deserve the VAT exemption for managing common investment funds, comparing their characteristics to collective investment institutions. The A-G found that pension funds, particularly those with benefit agreements, don’t meet the criteria due to mandated participation and guaranteed benefits. Consequently, the fund exemption isn’t applicable to their purchased services. However, the A-G suggests member states could designate other funds, like these pension funds, as common investment funds under national VAT rules. This outcome could significantly impact pension funds, potentially saving on operational costs, especially during the payout phase. Nevertheless, with the transition to the new pension system, its significance may wane. The ECJ will make the final decision based on the A-G’s advisory.
Source: loyensloeff.com
