ECJ C-641/22 (Y) – Questions – Does the exemption for the management of mutual funds apply to a pension fund?

On October 12, 2022, the ECJ received a request for preliminary ruling from the Netherlands (Case ECJ C-641/22 (Y)).

Context:

Article in the EU VAT Directive

Article 135(1)(g) of Council Directive 112/2006/EC

Article 135
1. Member States shall exempt the following transactions:

(g) the management of special investment funds as defined by Member States;

Facts

The facts and legal context at issue in this case are substantially similar to those at issue in Case C-644/22. The differences are indicated below to the extent relevant.
The applicant is a company pension fund and entered into an implementation agreement with employers on 31 October 2013. Under the agreement, the employers pay an annual pension contribution, which is determined for each individual member. No discounts or refunds are granted on the contributions. The employers guarantee an amount of EUR 250 000 000 between 2014 and 2020, which may serve to supplement contributions in the event that they are insufficient to achieve the pension accrual sought. They will pay a higher than the maximum premium for this.
If in any year there is a premium deficit that cannot be supplemented from the guarantee, the pension accrual of all members in that year will be reduced in proportion to the deficit. For 2020, the accrual rate was in fact reduced. A lower accrual will not be restored later.
The employer gives no guarantee as to the amount of pension entitlements already accrued. Contributions are invested directly and pension benefits are financed from dividend income or other receipts.
The applicant’s management board decides each year whether and to what extent, on the basis of the Centraal Bureau voor de Statistiek (Central Statistical Office) consumer price index, a supplement will be granted to the pension rights and entitlements. A supplement is only financed from free reserves and if the applicant’s capital position so allows.
A reduction in pension benefits and entitlements can only take place if theconditions set out in the Law on Pensions are met.

Questions

The question referred for a preliminary ruling is almost identical to the first question in Case C-644/22, the only difference being that there is a fourth indent below the question which reads as follows:
[…] […] Is it relevant in this regard:
[…] – that the employer has guaranteed for the period 2014 to 2020 up to an amount of €250,000,000 in order to achieve the targeted pension accrual?]

Question in ECJ C-644/22

1) Must Article 135(1)(g) of the VAT Directive be interpreted as meaning that unit-holders in a pension fund such as the one at issue in the main proceedings can be regarded as bearing investment risk, and does this mean that the pension fund constitutes a ‘special investment fund’ within the meaning of that provision? Is it relevant in that regard:
– whether unit-holders bear an individual investment risk or is it sufficient that unit-holders as a collective – and no one else – bear the consequences of the investment results?
– what the magnitude of the collective or individual risk is?
– to what extent the amount of the pension benefit depends also on other factors, such as the number of years of pension accrual, salary level and the actuarial interest rate?

AG Opinion

Decision

Summary

Source