News › Weekly Alert Article

VAT in Portfolio Management Services


Following the hearing on 1 March 2012 on the case of Finanzamt Frankfurt am Main V-H?chst v. Deutsche Bank, the Advocate General (AG) gave his opinion concerning the VAT treatment applied to portfolio management services. This case is of primary importance for portfolio managers, as it may directly impact their practices by lowering margins or leading to changes in operational processes and agreements. Taxand Luxembourg presents the AG's conclusions in this case and what they will mean for VAT going forward.

The case relates to the VAT treatment of portfolio management services, where a manager takes, at his own discretion and for remuneration, decisions on the purchase and sale of securities and implements these decisions by buying and selling the securities.

The first question of the case is whether such portfolio management is exempt from VAT. The AG's view in this respect is that such services should not benefit from a VAT exemption. The second question is whether these services constitute a single service or must be broken down into separate activities with different VAT treatments.

Taxand Luxembourg discusses VAT and portfolio management in greater depth

Taxand's Take

Based on the AG's conclusions, such management services shall therefore be subject to VAT. Although the AG's opinion is not binding for the Court, we anticipate that the Court will rule based on these conclusions, especially since these conclusions seem reasonable in light of the facts of the case, the European VAT legislation and previous jurisprudence.

Your Taxand contacts for further queries are:
Christophe Plainchamp
T. +352 26 940 280

Nicolas Devillers


Taxand's Take Author