The CJEU has given judgment in the case of GfBk Gesellschaft fur Borsenkommunikation 3 on the applicability of the fund management exemption in article 135(1)(g) of the Principal VAT Directive to the supply of investment advisory services provided by a German investment advisor, GfBk, to the manager of a German SIF. While the manager could accept or decline GfBk’s recommendations for the sale and purchase of assets, in practice it almost always accepted such recommendations.

The CJEU decided that, for the fund management exemption to apply, the services performed by a third party must, viewed broadly, form a distinct whole and be specific to, and essential for, the management of a SIF. This requirement would be satisfied where the third party advisory services were intrinsically connected to the activity characteristic of a fund manager, which would be the case where the services consisted of giving recommendations to a manager to purchase and sell assets.

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