- The Italian Tax Authorities responded to a ruling request regarding the VAT treatment of services outsourced by a SICAF involved in Litigation Finance, specifically concerning the services provided by a foreign company, Beta, which include IT platform management and legal action oversight.
- The SICAF, as a reserved Italian AIF, intends to invest in Litigation Finance by purchasing disputed credits and has chosen to outsource essential services to Beta, which are crucial for managing compensation claims and ensuring regulatory compliance.
- The Tax Authorities confirmed that the fees paid to Beta for these outsourced services qualify for VAT exemption, referencing previous rulings that recognize the financial nature of such services under Italian VAT law.
- Regarding brokerage services provided by intermediaries to Beta, the Tax Authorities clarified that these commissions, while paid by the SICAF, do not constitute a service provided to the SICAF and thus do not fall under VAT. However, they do contribute to the taxable base for the fees charged by Beta to the SICAF.
- The ruling emphasizes the innovative nature of Litigation Finance services and the importance of proper regulatory frameworks, confirming that the outsourced activities are essential for the SICAF’s operations and align with existing VAT regulations.
Source PwC
