On Oct 8, 2020, the ECJ decided on case ECJ C-235/19 (United Biscuits Pensions) related to pension fund management services and whether they are VAT exempted
For previous posts on this case, please click HERE.
Article in the EU VAT Directive
Article 135(1)(a) of Council Directive
Article 135
1. Member States shall exempt the following transactions:
(a) insurance and reinsurance transactions, including related services performed by insurance brokers and insurance agents;
Facts
- United Biscuits Ltd is the pension manager of the United Biscuits Pension Fund, a fixed-benefit occupational pension scheme for employees of United Biscuits.
- UB Pension Investments Ltd is the former pension manager of the UB Pension Investment Fund, a collective investment fund in which the assets of the pension scheme were invested between 1989 and 2006.
- They are hereafter referred to collectively as “managers”.
- Managers claim input VAT on the amounts they have paid to various investment managers with regard to fees for pension fund management services provided (“PF management services”).
- The PF management services consist of the management of investments on behalf of managers.
- The investment managers have not agreed with the managers to offer any form of compensation in the event that risks arise.
- These investment managers consist of both insurers within the meaning of the UK law and non-insurers who are nevertheless authorized for this by financial regulators.
- The claim relates to whether the PF management services were subject to VAT by non-insurers or whether these services were exempt “insurance transactions” within the meaning of the VAT directives.
- By decision of 30.11.2017, the High Court rejected the claim and ruled that PF management services provided by non-insurers were not exempt from VAT.
- Furthermore, the High Court did not consider that a question referred for a preliminary ruling was necessary because it was a legal clair. The managers have appealed.
Question
Are supplies of such pension fund management services (PFM Services) as are provided to the Trustees by (a) Insurers and/or (b) Non-Insurers “insurance transactions” within the meaning of Article 135(1)(a) of the VAT Directive (formerly Article 13B(a) of the Sixth Directive)?
AG Opinion
Article 13B(a) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, and Article 135(1)(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, must be interpreted as meaning that investment management services, such as those at issue in the main proceedings, supplied by a third party, do not come within the exemption provided for in those provisions.
Decision
Article 135(1)(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that investment fund management services supplied for an occupational pension scheme, which do not provide any indemnity from risk, cannot be classified as ‘insurance transactions’, within the meaning of that provision, and thus do not fall within the value added tax (VAT) exemption laid down in that provision in favour of such transactions.
Source curia
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