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*connectedthinking
Inside Indirect Tax*
Financial Services VAT AlertGlobal networklocal expertiseindividual service
In this editionAustria Portfolio management services & fund
administration services; amendment of the Austrian VAT guidelines
Germany Transfer of securities is a supply of
services Federal Fiscal Court decision: input VAT
deduction in connection with acquisition and fundamental modification of a building
The Netherlands Services Supplied to Dutch Pension
Fund by Foreign Asset Managers
Slovenia New VAT Act adopted in Slovenia Explanation by Slovene Ministry of
Finance of VAT treatment of data collection services performed by intermediaries
issue 2006/13
EditorialWe are pleased to present you with the PricewaterhouseCoopers Financial Services VAT Alert containing the latest European VAT news in the sector. This Alert is intended as an easy tool for you to keep track of the ever changing VAT in the Financial Services Sector. If you have any queries or need assistance, please contact us.
Cathy Hargreaves ([email protected])Global VAT Leader Financial Services Frans Oomen ([email protected])Partner VAT - Financial Services
AustriaPortfolio management services & fund administration services; amendment of the Austrian VAT guidelines
In VAT Alert 2006/10, information was provided regarding the proposed changes in portfolio management services. The Austrian Ministry of Finance has now finalized the VAT guidelines:
Place of supplyFollowing the ruling of the European Court of Justice (further: ECJ) “BBL” (C-8/03) certain fund management services qualify as financial transactions falling under Art 9(2)(e) of the EC Sixth VAT Directive.
As such, they are treated as supplied where the recipient (qualifying as a taxable person) is established. Portfolio management services are still treated as Art. 9(1) services and are taxable where the taxable person rendering the supply of services is established.
VAT exemptionThe Austrian Ministry of Finance has incorporated “Abbey National plc / Inscape Investment Fund” (C-169/04) in the VAT guidelines. Fund management services can be exempt from VAT, if they form a distinct whole and are specific to, and essential for, the management of special investment funds. Such specific services are, apart from tasks of portfolio management, services mentioned in Annex II to the UCITS Directive 86/611 under the heading "Administration".
For more information, please do not hesitate to contact:Christine Sonnleitner (+43 1 501 88 3605)Christoph Wagner (+43 1 501 88 3641)
Germany Transfer of securities is a supply of servicesFederal Ministry of Finance (BMF), decree dated 30 November 2006, IV A 5 - S 7100 - 167/06
Referring to the decision of the ECJ "Kretztechnik" (C-465/03) the Federal Ministry of Finance changed its view and confirmed that the transfer of securities has to be treated as a supply of services and not as a supply of goods.
The decree issued on 30 November 2006 will be applied to all cases still open to tax audit. Transfers of securities taking place before 1 January 2007 may still be treated as supplies of goods by taxpayers.
For more detailed information, please do not hesitate to contact:Sylvia Neubert (+49 69 9585 62 35)Christiane Daniel (+49 89 5790 67 11)
GermanyFederal Fiscal Court decision: input VAT deduction in connection with acquisition and fundamental modification of a buildingGerman Federal Fiscal Court, ruling , dated 28 September 2006, V-R-43/03
The question in this case was whether input VAT amounts incurred in connection with the fundamental modification of a building which was subsequently leased out partly VAT exempt and partly with option to taxation had to be directly allocated to the parts of the building the modification measures referred to, or whether the pro rata based on the use of the total building had to be applied.
According to the opinion of the Federal Fiscal Court the treatment of the modification according to German income tax law is decisive for the determination of the amount of recoverable input VAT. If the reconstruction work leads to additional acquisition or production cost (capital expenditure), the input VAT recovery has to be calculated by using the pro rata that refers to the use of the whole building. If the cost for the reconstruction work has to be qualified as maintenance expenses the input VAT recovery depends on the use of the part of the building the work refers to.
Furthermore, the Federal Fiscal Court confirmed that an entrepreneur cannot change his pro rata calculation method once the underlying VAT assessment is final, i.e. an appeal against the VAT assessment is no longer possible.
For more detailed information, please do not hesitate to contact:Sylvia Neubert (+49 69 9585 6235)Christian Schubert (+49 69 9585 6665)
The NetherlandsServices Supplied to Dutch Pension Fund by Foreign Asset Managers
The fund received invoices from foreign asset manag-ers which did not include VAT. The fund did not declare 19% Dutch reverse charge VAT on these invoices.
The court in Breda ruled that: the services provided by the foreign asset managers
should be considered as banking- and financial services as referred to in art. 6(2)(d)(5) Dutch VAT Act. The invoices for these services are issued to the fund as an entrepreneur. Consequently these services are taxable for VAT purposes in the Netherlands.
the services were not considered to be collective asset management as referred to in the exemption of art. 11(1)(i)(3) Dutch VAT Act. Accordingly, these services are not exempt.
the Dutch input VAT relates completely to the services provided by the fund in its role as a retirement insurer. Since the fund mainly performs exempt activities the VAT due on the reverse charge is non-deductible.
Just as in a previous decision by this court on the VAT position of pension funds, an appeal is expected. Consequently, a definitive judgement on this matter will probably take a number of years. We have experienced that the tax authorities are still prepared to come to practical agreements on this matter for the past and the near future.
For further information, please do not hesitate to contact: Edwin van Kasteren (+31 20 568 5861)Annemarie Beltman (+31 20 568 6726)
SloveniaNew VAT Act adopted in Slovenia
The National Assembly has adopted a new Value Added Tax Act (˝VAT Act˝) which will come into force on 1 January 2007.
Among the changes to the current VAT Act are: exclusion of ˝use and enjoyment˝ rule refund of VAT surplus requested by the taxable
person is no longer limited to the minimum amount;
the threshold for obligatory VAT registration for small taxable persons is increased to 25.000 EUR;
explicit definition that Electronic Data Interchange (EDI) should be used.
For more information, please do not hesitate to contact: Anka Pogacnik (+386 1 58 36 018)Crtomir Borec (+386 1 4750 152)
SloveniaExplanation by Ministry of Finance of VAT treatment of data collection services performed by intermediariesExplanation Ministry of Finance, 6 November 2006, no. 432-32/2006
On 6 November 2006 the Ministry of Finance issued an explanation with respect to the VAT treatment of services of negotiation and transactions in securities of investment funds outsourced to a third party (subcontractor, e.g. stock exchange agents).
Referring only to the paragraph 40 of the judgment in CSC Financial Services (ECJ, C-235/00), the Ministry explained that services such as providing information to other parties and receiving and processing applications for subscription to the securities (˝data collection services˝) performed by a subcontractor are treated as clerical formalities. Therefore, such services are not exempt under Article 13Bd(5) of EC Sixth VAT Directive.
We would like to point out that the Ministry did not express a view on whether the services of data collection are exempt if subcontractors act
independently from the investors and investment funds (as defined in paragraph 39 of the judgment in CSC Case). Financial institutions should carefully analyse their VAT position with respect to subcontractors in order to avoid any negative taximplications.
For more information, please do not hesitate to contact: Anka Pogacnik (+386 1 58 36 018)Crtomir Borec (+386 1 4750 152)
Contact
AustriaChristine Sonnleitnertel: +43 1 50188-3630
BelgiumIne Lejeunetel: +32 9 268 8300
CyprusChrysilios Pelekanostel: +357 22 555280
Czech RepublicVaclav Patektel: +420 251 152 569
DenmarkJan Huusmann Christensen tel: +45 39 459 452
EstoniaAin Veidetel: +372 6 141 978
FinlandJuha Laitinentel: +35 89 228 01409
FranceStéphane Henriontel: +33 1 56574139
GermanySylvia Neuberttel: +49 69 958 56235
GreeceMary Psyllatel: +30 210 687 4444
HungaryTamas Locseitel: +36 14 619 358
IrelandJohn Fay tel: +35317048701
ItalyPier Luca Mazzatel: +39 02 6699 5732
LatviaZlata Elksnina-Zascirinskatel: +371 709 4514
LithuaniaKristina Bartusevicienetel: +370 5 2392 365
Luxembourg Michel Lambiontel: +352 494 848 3126
MaltaDavid A. Ferry tel:’+356 256 46712
The NetherlandsFrans Oomentel: +31 20 568 47 81
NorwayYngvar Engelstad Solheimtel: +47 95260657
PolandMarcin Chomiuktel: +48 225 234 760
PortugalMario Braztel: +351 21 7914 4053
RomaniaDiana Coroaba tel: +40 212 028 693
SlovakiaEva Fricovatel: +421 2 59 350 613
SloveniaCrtomir Borectel: +38 614 750 152
SpainMiguel Blascotel: +34 9 1568 4798
SwedenLars Henckeltel: +46 85 553 3326
SwitzerlandTobias Meier Kerntel: +41 58 792 43 69
United KingdomCathy Hargreaves tel: +44 207 212 5575
© 2006 PricewaterhouseCoopers. All rights reserved. Disclaimer. Clients receiving this Alert should take no action without first contacting their usual PricewaterhouseCoopers Indirect Tax Advisor.
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