VAT and SIFs: what does ‘management’ mean?

A stated purpose of the VAT exemption for the management of special investment funds (SIFs) is to ensure that VAT is fiscally neutral between direct investment and investment through a fund. It is clear from certain EU cases, however, that the exemption goes beyond that stated purpose. For example, with direct investment, the presence of a taxable element deprives a combined service of exemption; whereas, with collective investment, a distinct element of exempt ‘management’ is itself exempt even as a separate service. Collective investment can be said in that respect to have an edge over direct investment.