Management of alternative investment funds: VAT exempt even if the manager is only subject to “de minimis” registration with the FSMA?
Over the past few years, the scope of the Belgian VAT exemption for the management of investment funds has been modified several times, following multiple changes to the European and Belgian regulatory frameworks of funds (Art. 44, §3, 11° Belgian VAT Code).
VAT exemption for the management of alternative investment funds
Most recently, the wording of the VAT exemption in the Belgian VAT Code was modified so that the management of collective investment funds as defined in the Act of 19 April 2014 on alternative investment funds and their managers (the AIFM Law) was made VAT exempt.
However, there has been continuing uncertainty about whether the new exemption covers the management of so-called ‘small’ alternative investment funds within the meaning of the AIFM Law.1
The Fiscale Eenheid X case
As a result of the Fiscale Eenheid X case (C-595/13), in which the European Court of Justice (ECJ) established that the VAT exemption for the management of special investment funds applies to investment undertakings that are “subject to specific supervision at the national level”, the question was raised whether the Belgian tax authorities would accept the application of the VAT exemption in cases where such management services are performed for ‘small’ alternative investment funds the manager of which is not subject to full authorisation but only to a registration obligation with the Belgian financial regulator, the Financial Services and Markets Authority (FSMA).
Although it is currently not expected that the Belgian tax authorities will issue additional guidance on this particular point, they have in some individual cases accepted the application of the VAT exemption for management services performed for these so-called ‘small’ alternative investment funds.
Management services that are performed by managers of alternative investment funds which are subject only to the lighter supervision regime of the AIFM Law could therefore, in principle, benefit from the VAT exemption.
In our view, this is fully in line with the ECJ’s judgment in the aforementioned Fiscale Eenheid X case and with the wording of the VAT exemption itself.
Individual circumstances must be taken into account
It should be noted that, as always—but especially until such time as further guidance has been issued—it is important to look at the facts and circumstances of each case individually in order to determine eligibility or otherwise for the VAT exemption.
1It concerns funds where (i) the cumulative alternative investment funds under management are maximum EUR 100 million; or (ii) the alternative investment fund manager only manages unleveraged alternative investment funds that do not grant investors redemption rights during a period of 5 years and where the cumulative alternative investment funds under management are maximum EUR 500 million.
Thierry is co-head of Loyens & Loeff’s VAT, Customs & International Trade Practice Group in the Benelux. He divides his time between Loyens & Loeff’s Belgian and Luxembourg offices. He is also a member of the Loyens & Loeff Automotive Team and its China and India Desks.T: +352 466 230 510 M: +352 691 96 30 42 E: email@example.com
BertGeversTax Adviser Local Partner Loyens & Loeff Belgium
Bert is a member of the Loyens & Loeff VAT, Customs & International Trade Practice Group in Belgium. He is a core member of the L&L Corporate Investigations Team and co-head of the Food and Beverages Team.T: +32 2 743 43 18 M: +32 496 12 53 57 E: firstname.lastname@example.org
JochenVankerckhovenAttorney at law Associate
Jochen Vankerckhoven is a member of the Loyens & Loeff Indirect Tax Practice Group and International Trade Group in Belgium. He is also a member of the Automotive Team and an associate in our Brussels office.T: +32 2 743 43 68 M: +32 499 43 46 45 E: email@example.com
HélèneBourleauAttorney at law Associate
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LeviGoossensAttorney at law Associate
Levi Goossens is a member of the Loyens & Loeff Indirect Tax Practice Group. He also is a member of the Financial Institutions Team. Levi works as an associate in the Brussels office in Belgium.T: +32 2 743 43 81 M: +32 474 35 33 61 E: email@example.com