VAT exemption for investment advisory services provided to management companies

ECJ confirmed in a decision dated March 7, 2013 the VAT exemption applied to investment advisory services rendered by a third party advisor to a management company of a special investment fund (“FCP”).

The case was the following. GfBk is a German company providing information and investment advice (i.e. advice on the stock market and the marketing in connection with financial assets). GfBk concluded a contract with a management company of special investment fund. Under this arrangement, GfBk provided advice to management company of the fund. However, GfBk was not given a mandate to buy or sell shares.

GfBk’s remuneration was based on the value of the fund.

This judgment has significant consequences for French VAT purposes. Indeed, this case confirms that a VAT exemption may be available for investment advisory services even though such services are rendered to management companies of UCITS (e.g. FCP, FCPR, SICAV).

Such services were so far normally subject to VAT.

Actions to be taken now :

  1. Reviewing agreements to confirm the exemption ;
  2. Analyzing VAT and Salary Tax consequences at the level of third party service providers.
  3. Where applicable, filing VAT reclaims and managing all the consequences, vis-à-vis the French tax authorities, of the VAT previously charged.