On March 11, 2020 the Court of Justice of the European Union (CJEU) judged in Case C‑94/19, San Domenico Vetraria SpA versus Agenzia delle Entrate (supported by: Ministero dell’Economia e delle Finanze) (ECLI:EU:C:2020:193).
This request for a preliminary ruling concerns the interpretation of Articles 2 and 6 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 (OJ 1977 L 145, p. 1; ‘the Sixth Directive’) and the principle of the neutrality of value added tax (VAT).
The request has been made in proceedings between San Domenico Vetraria SpA and the Agenzia delle Entrate (Revenue Authority, Italy) concerning deductions made by San Domenico Vetraria, in respect of the 2005 tax year, from VAT paid on sums repaid to its parent company, Avir SpA, for the secondment of a director.
On March 11, 2020 on the website of the Court of Justice of the European Union (CJEU) the opinion of Advocate General Pikamäe in the Case C-231/19, BlackRock Investment Management (UK) Limited versus Commissioners for Her Majesty’s Revenue and Customs (ECLI:EU:C:2020:196), was published.
The system of value added tax (VAT) is once again being tested by new technologies. At issue this time is artificial intelligence in the field of investment in the context of different types of investment funds.
The management of special investment funds (‘SIFs’) is expressly exempted under Article 135(1)(g) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax. By contrast, the management of investment funds that are not SIFs (‘other funds’) is subject to VAT.
BlackRock Investment Management (UK) Ltd (‘BlackRock’) manages both SIFs and other funds. To do this, it uses the services of BlackRock Financial Management Inc. (‘BFMI’), a company established in the United States which belongs to the same group as BlackRock. BFMI uses an IT platform known as Aladdin which provides a broad range of investment management services, such as market analysis, monitoring performance, risk assessment, monitoring regulatory compliance and implementing transactions. Since BFMI is a company incorporated under US law, BlackRock must pay the VAT itself, under the reverse charge mechanism, in respect of the services supplied by BFMI.
The dispute in the main proceedings is between BlackRock and the Commissioners for Her Majesty’s Revenue and Customs (United Kingdom) (‘the tax authority’) and concerns the granting of the exemption provided for in Article 135(1)(g) of Directive 2006/112. In so far as BFMI provides management services using Aladdin, in the same way, to SIFs and to other funds, the question arises as to which tax scheme applies to those services, given that exemption.
The referring court, the Upper Tribunal (Tax and Chancery Chamber) (United Kingdom) asks the Court whether, and under what conditions, that exemption should be granted in view of the particular circumstances of the present case, namely the supply of management services to all types of funds taken together, using a single IT platform.