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Netherlands: VAT policy statement, specific state supervision of investment funds

Netherlands: VAT policy statement

The Dutch Deputy Minister of Finance in early April 2019 announced a policy statement concerning the value added tax (VAT) implications of the specific state supervision of investment funds.


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The policy statement has an effective date of 2 April 2019, and addresses what is “specific state supervision’” as imposed by the Court of Justice of the European Union (CJEU) as one of the conditions for applying the VAT exemption for the management of special investment funds (Article 135(1)(g) EU VAT Directive).

Pursuant to CJEU case law, the following cumulative conditions must be satisfied to qualify as a “special investment fund” within the meaning of the VAT exemption:

  • The fund must be financed by more than one participant.
  • The contributed funds must be invested according to the principle of risk-spreading.
  • The investment risk must be borne by the participants.
  • The fund must be subject to specific state supervision.

The last condition is relatively new and the CJEU introduced it for the first time in the Fiscale Eenheid X (C-595/13) case. In practice, this condition or limitation of the VAT exemption has raised questions in the Netherlands such as: What type of state supervision is sufficient? 

In the policy statement, the Deputy Minister provides a framework for interpreting “specific state supervision.” Moreover, if a fund complies with the specific state supervision condition, it must still comply with the first three conditions (listed above) in order to qualify as a “special investment fund” within the meaning of the VAT exemption. 

Read an April 2019 report prepared by the KPMG member firm in the Netherlands 

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