On July 5, 2016 the Irish Revenue issued Revenue eBrief No. 63/16. Via this eBrief is to advise that 2 new VAT manuals have been created to provide guidance in respect of:
· Revenue's position on the "management of special investment funds" following the decision of the CJEU in GfBk (Case C-275/11); and
· The VAT treatment of management services supplied in relation to Self-Directed Life Assurance Bonds and equivalent products.
Revenue's position on the "management of special investment funds" following the decision of the CJEU in GfBk (Case C-275/11)
Revenue Operational Manual 5.74 sets out the position of the Irish Revenue following the decision of the Court of Justice of the European Union (CJEU) from March 7, 2013 in Case C‑275/11 GfBk (ECLI:EU:C:2013:141). The issue in dispute concerned the VAT treatment of investment advisory and information services outsourced by a fund manager to a third party.
In Case C-275/11 the CJEU judged that Article 13B(d)(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 must be interpreted as meaning that advisory services concerning investment in transferable securities, provided by a third party to an investment management company which is the manager of a special investment fund, fall within the concept of ‘management of special investment funds’ for the purposes of the exemption laid down in that provision, even if the third party has not acted on the basis of a mandate within the meaning of Article 5g of Council Directive 85/611/EEC of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) as amended by Directive 2001/107/EC of the European Parliament and of the Council of 21 January 2002.
In Revenue Operational Manual 5.74 the Irish Revenue states a.o. that having regard to CJEU jurisprudence, the Irish Revenue will consider the following in determining if services outsourced to a third party constitute the activities of “management” of a specified fund for the purposes of the exemption:
· the services must, viewed broadly, form a distinct whole, and be specific to, and essential for the management of special investment funds;
· the services must be intrinsically connected to the activity characteristic of an investment management company i.e. the services concerned must be eminently characteristic of the activities of a special investment fund;
· mere support or technical supplies, such as the making available of IT systems, provision of software, general legal and accountancy services etc. are not covered by the scope of the exemption;
· it is not essential that the outsourced services lead to a change in the legal or financial situation, rather the services should constitute “an outsourcing, in substantive terms, of the activity of management”.
With respect to a potential retrospective application of the CJEU decision the Irish Revenue states the following:
“The decision of the CJEU, which has direct effect, may be relied on for past VAT periods, subject to the 4-year time limit for making claims. Adjustments should be made for any claimed inputs that related to previously taxable income.
Where a fund, the trustees of a fund or an investment management company, believe they have been wrongly charged VAT, they should contact their service provider to claim back the overpaid VAT.”
Click here to be forwarded to Revenue Operational Manual 5.74 as available on the website of the Irish Revenue. (The file is in the format of a downloadable Pdf-document)
The judgement of the CJEU from March 7, 2013 in Case C‑275/11 GfBk (ECLI:EU:C:2013:141) can be found here.
Revenue Operational Manual 5.75 - VAT treatment of management services supplied in relation to Self-Directed Life Assurance Bonds and equivalent products
The EU VAT Directive (Council Directive 2006/112/EC) provides that Member States shall exempt “the management of special investment funds as defined by Member States”. In this respect Ireland has designated qualifying collective investment undertakings administered by authorised life companies as “special investment funds”. Revenue Operational Manual 5.75 provides information regarding an updated VAT treatment of Self-Directed Life Assurance Bonds and equivalent products.
Click here to be forwarded to Revenue Operational Manual 5.75 as available on the website of the Irish Revenue. (The file is in the format of a downloadable Pdf-document)
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