The Netherlands: Decree on VAT exemption for fund management updated
On November 2, 2021, the decree on the VAT exemption for fund management was updated. This was prompted by a Dutch Supreme Court ruling from December 2020 that allowed service providers with a license for individual asset management to also qualify for the VAT exemption.
In the decree on the VAT exemption for fund management from 2019, the State Secretary of Finance had explicitly taken the position that the exemption did not apply to products that fall under the regulatory regime for individual asset management. Due to a Dutch Supreme Court ruling from December 2020 (see our earlier news item in this regard), this position was outdated and the decree had to be updated. This has now been done - under the updated decree, these types of products can also share in the fund exemption, provided the product is sufficiently similar to a UCITS. In addition, there are a number of other changes to the decree:
- Banks that have a banking license from the Dutch Central Bank and are allowed to provide investment management services under this license are now also eligible for the fund exemption (to the extent that they manage funds that are sufficiently similar to a UCITS).
- Asset managers established outside the EU who are exempt from the obligation to apply for a license from the Dutch regulator can now, under certain circumstances, also qualify for the fund exemption.
The update of the decree will have retroactive effect to December 4, 2020, the date of the Dutch Supreme Court ruling.
Implications for the practice
The Supreme Court ruling opened up the possibility for asset managers to include a wider range of financial services under the fund exemption. Because the decree ‘lagged’ behind the Dutch Supreme Court ruling, discussions with the Dutch Tax Authorities could arise in practice. These discussions concerned both the scope of the fund exemption and the moment at which it should be considered to take effect. The updated decree provides more clarity and guidance to service providers and is therefore a welcome development for the practice.