Developments in Dutch case law
On 22 January 2019 the Court of Appeal (Gerechtshof) of The Hague has ruled that the VAT exemption for fund management should be interpreted in a strict manner insofar it concerns services provided by third parties to a fund manager.
In particular, it does not apply to services concerning the supply of market information and risk analysis as such services – according to the Court – are not specific for collective investment funds but rather investing in general. Although questions can be raised whether the exemption should be interpreted this strictly, the decision of the Court is in line with settled case-law and general Dutch VAT practice.
Furthermore, the management of the fund management entity (which was outsourced to the personal holding of one of the founders) did not qualify for the exemption in this case. According to the Court, the services provided by the founder’s personal holding to the fund management entity – as described in the contract – were too generic to be considered specific for fund management. The Court considered that the services described in the agreement were more the type of services which would typically be provided by a trust company and thus not specific for the management of a collective investment fund. In our view this emphasizes the need for careful drafting of agreements – and in particular the scope of services – in situations where a fund management entity partly outsources its activities to the holding companies of the founders.