ECJ C-644/22 (BPFL) – 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-644/22 (BPFL))

Context: The defendant imposed an additional VAT assessment on the applicant, a pension fund, for the asset management services that the applicant had purchased from a foreign asset manager. The applicant seeks annulment of the assessment on the ground that those asset management services are allegedly exempt from VAT by virtue of its status as an investment fund

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 applicant is a compulsory industry pension fund for the food sector. It pays out lifelong or temporary supplementary pensions in favour of unit-holders or their beneficiaries. These unit-holders are the employees for whom holding units is compulsory under the pension scheme established by the applicant.
The compulsory pension scheme is financed by an annual contribution levied for each unit-holder, as determined by the pension administrators after consultation with employees’ and employers’ associations. The contribution is payable by the affiliated employer, which may deduct part of the contribution from the employee’s salary.
In addition to the compulsory pension scheme, the pension scheme rules also include a supplementary pension scheme. The supplementary pension scheme is based on a contribution agreement.
In 2009, the applicant purchased asset management services from an asset manager established outside the Netherlands. In its 2009 VAT returns, it paid no VAT (turnover tax) for the services provided to it by the asset manager, but did submit a correction for those returns. Following that correction, on 31 December 2014, the defendant imposed an additional tax assessment and an interest charge.
At the stage of the objection against the additional assessment of 31 December 2014, the defendant acknowledged that the supplementary pension scheme can be classified as funds raised for collective investment purposes and that the management services provided for that purpose are exempt. He reduced the additional assessment and the interest charge on that basis by a decision of 1 February 2021 on the objection.
The applicant then lodged an appeal with the referring court

Questions

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?
2) Does the principle of tax neutrality require that, for the application of Article 135(1)(g) of the VAT Directive, in the case of funds which are not UCITS, it must be assessed not only whether they are comparable to UCITS but also whether, from the perspective of the average consumer, they are comparable to other funds that are not UCITS funds but are regarded by the Member State as special investment funds?

AG Opinion

Decision

Summary

Source