Tax alert - 12 July 2013

Luxembourg: Revised list of investment funds capable of receiving VAT exempt management services

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Article 135.1.g) of the VAT Directive 2006/112/EC exempts from VAT “the management of special investment funds as defined by Member States” and is implemented in article 44.1.d) of the Luxembourg VAT Law which provides a list of the various vehicles that benefit from a VAT exemption for the management services they receive. This list is revised from time to time to take into account regulatory evolutions and the apparition of new categories of funds.

Article 212 of the AIFM Law1modifies article 44.1.d) and establishes a revised list of the funds which might benefit from VAT exempt management services.  The new list will enlarge the application of the VAT exemption to:

  • All Luxembourg investments funds, including SIFs and SICARs that are under the supervision of the Luxembourg’s CSSF (“Commission de surveillance du secteur financier” (Commission for the Supervision of the Financial Sector) which is the supervisory body of the financial sector) and all similar EU investment funds subject to the supervision of an EU competent authority similar to the Luxembourg’s CSSF
  • All alternative investment funds (AIF) as defined under the AIFM law, this includes Luxembourg investment companies in risk capital (SICARs) and specialized investment funds (SIFs) under the supervision of the CSSF
  • All Luxembourg pension funds that are under the supervision of the CSSF or of the Luxembourg’s CaA Luxembourg (“Commissariat aux assurances” (Insurance Supervisory Authority) which is the supervisory body of the insurance sector) and all EU pension funds subject to the supervision of an EU competent authority similar to the Luxembourg’s CSSF or CaA
  • All securitization vehicles aimed by the Luxembourg securitization law and vehicles with a similar purpose aimed by the Regulation (EC) No 24/2009 of the European Central Bank of 19 December 2008 concerning statistics on the assets and liabilities of financial vehicle corporations engaged in securitization transactions

The AIFM Law has been voted on 12 July 2013 and published in the Luxembourg official journal on 15 t July. It comes into force the day of its publication in the Luxembourg official journal.

The new drafting of this law ensures, firstly, that all entities benefitting from VAT exempt management services before the change of article 44.1.d) will continue to benefit from this tax favorable regime under the new version and, secondly, that the VAT exemption is adapted to the regulatory changes.  It also allows a level playing field in the VAT treatment of services for Luxembourg and EU funds. However, it is most likely that the law would need to be amended again in order to take into account the jurisprudence of the CJEU regarding pension funds.

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1The AIFM Law which is dated 12 July 2013 implements the AIFM Directive (Alternative Investment Fund Managers Directive (2011/61/EU of 8 June 2011)).