Wragge Lawrence Graham & Co

UK 200 2013 position: 25

VAT and investment management services for DB pension funds — a new jigsaw

Last summer, the Court of Justice of the European Union (CJEU) ruled (in PPG Holdings BV (C-26/12)) that VAT payable on services provided for a Dutch pension fund was deductible by the employer if certain conditions were met. Since then, HMRC has issued a keenly awaited announcement in response to the ruling.

It is important to note that this announcement relates to defined-benefit (DB) pension schemes (the announcement notes that a CJEU ruling as regards defined-contribution schemes is expected soon).

HMRC had previously allowed employers to deduct VAT regarding costs incurred in relation to the day-to-day setting up and administration of an occupational pension scheme, as these were considered to be overheads of the employer and therefore a direct and immediate link to the employer’s business activities…

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