Management of alternative investment funds: VAT exempt even if the manager is only subject to “de minimis” registration with the FSMA?

Over the past few years the scope of the Belgian VAT exemption for the management of investment funds has been modified several times following multiple changes in the European and Belgian regulatory framework of funds (Art. 44, §3, 11° Belgian VAT Code).

In the most recent change of the wording the VAT exemption was modified so that the management of collective investment funds as defined in the Act of 19 April 2014 on alternative investment funds and their managers (AIFM Law) is VAT exempt. However, legal uncertainty remained as to the application of the VAT exemption for the management of so-called ‘small’ alternative investment funds within the meaning of the AIFM Law[1]. As a result of the Fiscale Eenheid X case (C-595/13) where the European Court of Justice established that the VAT exemption for management of special investment funds applies to investment undertakings that are “subject to specific supervision at the national level”, the question was raised whether the Belgian VAT authorities would accept the application of the VAT exemption when the management services are performed to ‘small’ alternative investment funds for which the manager is not subject to full authorization but only to a registration obligation with the Belgian financial regulator FSMA.

Although it is currently not expected that the Belgian VAT authorities will issue additional guidance on this particular point, we are aware of individual cases where they accepted the application of the VAT exemption for management services performed to these so-called ‘small’ alternative investment funds. Management services performed by alternative investment fund managers that are only subject to the lighter supervision regime of the AIFM Law could therefore in principle benefit from the VAT exemption. This is in our view fully in line with the ECJ’s judgment in the Fiscale Eenheid X case (C-595/13) and the wording of the VAT exemption.

Note however that until further guidance is provided it remains important to look at the facts and circumstances of each case individually in order to determine whether it is eligible for the VAT exemption.