The next stage in the ongoing debate about the VAT treatment of pension fund management is due to be reached on 12 December, when the advocate general’s opinion in the Danish case of ATP PensionService A/S (C-464/12) is due to be delivered.
The case concerns the treatment of the ‘management’ of a ‘defined contribution’ pension arrangement that is, it seems, open to employees from a wide range of employers, rather than being a specific scheme for staff of a particular business. It follows that the scheme has more in common with ‘special investment funds’ that employees might invest in to save for their retirement, but there are also differences, especially the fact that payments into the fund are effectively ‘locked in’ until the individual retires.
At the hearing, it was suggested that the fact that employees bear the ‘investment risk’ which is reduced by being spread (in common with other types of ‘special investment funds’) distinguished the case from that of Wheels Common Investment Fund and Ors (C-424/11), which concerned a ‘defined benefit’ arrangement where the employer bears the ‘investment risk’. In the Wheels case, the CJEU decided that the fund was not a ‘special investment fund’. However, in the ATP hearing, the Danish tax authority was supported by the UK and the European Commission in its view that the fund was not a ‘special investment fund’ and hence that the management of it could not qualify for exemption. It also contended that the services supplied did not amount to ‘management’ in any event, being more in the nature of administrative services.
If the opinion, and ultimately the CJEU, agrees with the Danish tax authority that the fees do not qualify for exemption, further questions will arise – who is the recipient of the relevant supplies and do they have any right to recover VAT on them? The CJEU’s decision in the Dutch case of Fiscale eenheid PPG Holdings BV cs (C-26/12) suggests that the may be scope for VAT registered employers to reclaim VAT on the costs of operating their pension schemes. HMRC’s reaction to the decision in that case is awaited with interest.
