Fund management services for pension schemes not 'insurance transactions': EU court

On the 10/12/20 at 3:34PM


Adrien Paredes-Vanheule

The European court of justice CJEU on Thursday replied to the following question : ‘Are supplies of pension fund management services provided to pension schemes by insurers and/or non-insurers “insurance transactions”?’ The question was brought to the attention of the CJEU by the Civil Division of the Court of Appeal (England & Wales). The latter had to examine the case of trustees of a defined benefit occupational pension scheme for the employees of British agrifood company United Biscuits (UK), which unsuccessfully asked the United Kingdom tax authority for reimbursement of the value added tax at issue.

The interpretation of the article 135(1)(a) from a European directive of 2006 on the common system of value added tax was core to the case. That specific article exempts from VAT application insurance and reinsurance transactions, including related services performed by insurance brokers and agents. But the CJEU ruled on Thursday that the article must be interpreted as “meaning that investment fund management services supplied for an occupational pension scheme, which do not provide any indemnity from risk, cannot be classified as ‘insurance transactions’, within the meaning of that provision, and thus do not fall within the value added tax (VAT) exemption laid down in that provision in favour of such transactions.”