CDC Pension Fund Does Not Qualify as a Special Investment Fund for VAT Exemption

• The District Court of The Hague has ruled that a Dutch industry-wide pension fund operating a Collective Defined Contribution (CDC) scheme does not qualify as a “special investment fund” (SIF) for purposes of the VAT exemption for the management of special investment funds. As a result, the pension fund was not entitled to a refund of VAT incurred on investment management services.
• In reaching its decision, the court relied on the principles established by the Court of Justice of the European Union (CJEU) in the Stichting BPL Pensioen judgment of 5 September 2024. The court found that participants in the CDC pension scheme do not bear investment risk to a degree comparable to investors in a collective investment undertaking. Although the scheme’s funding position may affect future indexation and, in certain circumstances, pension benefits, participants’ pension entitlements are primarily determined by employment-related factors such as salary and years of service rather than directly by investment performance.
• The court also rejected the pension fund’s reliance on the principle of fiscal neutrality. According to the court, the CDC pension scheme is not sufficiently comparable to investment funds that qualify as SIFs under EU VAT law. Consequently, the management services supplied to the pension fund do not fall within the VAT exemption applicable to the management of special investment funds, confirming a restrictive interpretation of the exemption in the context of occupational pension arrangements.

Source: Taxlive

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