Court of Justice of the European Union rules that investment advice is exempt from VAT

In the case of GfBK Gesellschaft für Börsenkommunikation mBH v Finanzamt Bayreuth (GfBK), the Court of Justice of the European Union (CJEU) has confirmed that investment advice provided to certain investment funds by a third party constitutes an activity of ‘management’ and therefore benefits from VAT exemption.

To be exempt from VAT, management services provided by a third party manager must form a distinct whole and be specific to, and essential for, the management of the special investment fund.
Article 13B of the Sixth VAT Directive (Article 13B) does not preclude exemption from VAT where the management of the special investment fund is broken down into smaller discrete services. It does not breach the principle of fiscal neutrality to include investment advice provided to a special investment fund within the definition of “management” for the purposes of Article 13B with the effect that it is treated as exempt from VAT…

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