Decision of the German Federal Finance Court dated 11.10.2012 (V R 9/10)

Following the Court of Justice of the European Union's judgment on the "Deutsche Bank" case, the German Federal Finance Court decided that the discretionary fund management services for individuals in the case at hand cannot be VAT-exempt. The services comprise a single taxable service consisting of both advisory elements and the purchasing and selling of securities. Only the latter element could have been VAT-exempt, however, in the opinion of the Court of Justice none of the elements prevailed in the case at hand so that the single service could not enjoy the VAT exemption. The tax place was to be treated, however, as if this was a VAT-exempt banking service, i.e., it was to be located outside of Germany in those cases where the service was rendered to consumers in non-EU countries. German law had a different rule on the tax place; however, the taxpayer was allowed to refer directly to the EU Directive on this matter.