In principle, a fund should be tax neutral: only investments and investors should be taxed. As this is a well-known principle in the income tax field, there is no reason why it should not apply for indirect taxes such as VAT. The EU VAT Directive and the Luxembourg VAT law foresee a VAT exemption for fund management services. While this seems favorable, it actually masks the “hidden” VAT burden.
Source Deloitte
See also ECJ Cases: Focus on ”Exemption – Management of special investment funds” (Art. 135(1)(g))
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