Publication date 08 November 2013
The taxpayer has concluded management agreements with three companies that invest in real estate. The taxpayer’s activities consist of the administration and management of the companies, attracting investors, the purchase and sale of real estate and property management. The taxpayer receives the following payments:
The investors in the real estate companies are institutional investors.
In 2009, the District Court Breda ruled that the activities of the taxpayer should be considered a single service subject to the VAT exemption for the management of special investment funds.
However, in 2011 the Court of Appeals Den Bosch concluded that the taxpayer’s activities consisted of a number of separate services, including property management, and ruled that these separate services were ‘distinctive and essential’ elements of the management of real estate funds or real estate companies and were therefore VAT exempt.
According to the Supreme Court, CJEU case law gives cause to question whether investment funds and investment companies that invest in real estate are ‘special investment funds’ as referred to in the VAT exemption. The Supreme Court also considers that it cannot be unequivocally concluded on the basis of CJEU case law that property management is to be regarded as ‘management’ for the purposes of the VAT exemption. The Supreme Court has therefore requested the CJEU for a preliminary ruling on the following questions:
There are several reasons why this case is relevant to the real estate funds practice. The CJEU’s ruling on these questions will provide more clarity on how ‘investment funds’ and ‘management’ should be interpreted. This is particularly relevant in light of developments caused by the Alternative Investment Fund Managers Directive (AIFMD).
The tax advisors of the Indirect Tax Financial Services Group of KPMG Meijburg & Co would be pleased to help you identify any consequences these proceedings may have. They can also advise you on how to deal with and anticipate amendments to VAT legislation, policy and case law, as they have extensive experience in these matters. Feel free to contact one of these tax advisors or your regular contact at KPMG Meijburg & Co for more information.