Through the Order of July 27, 2013 implementing the Directive of June 8, 2011 on managers of “alternative investment funds” – also known as the “AIF” Directive (Alternative Investments Funds) – Article 261 C-1 ° f – the General Tax Code, providing for the VAT exemption of UCITS management services, has been changed.
This exemption has indeed been extended to a number of “alternative” funds. The precise listing of these funds is listed in the provisions of the French Monetary and Financial Code. The relevant funds should be the following (in French) :
- Fonds d’investissement à vocation générale
- Fonds communs de placement à risques
- Fonds communs de placement dans l’innovation
- Fonds d’investissement de proximité
- Fonds de fonds alternatifs
- Fonds agréés ouverts à des investisseurs professionnels à vocation générale
- Fonds déclarés professionnels spécialisés
- Fonds déclarés professionnels de capital investissement
- Fonds communs de placement d’entreprise
- Sociétés d’investissement à capital variable
The database of the French tax authorities (“BOFiP”) has not been amended yet in order to comment the new writing of this article and the expansion of the scope of the VAT exemption and in order to indicate the VAT implications for the relevant taxable persons.
In an international context, this change reopens the issue of the territorial scope of the VAT exemption, especially when the funds is governed by foreign law and receives management services from a French management company, or when the French or foreign management company benefits from funds investment advisory services such as “GfBk” services. This last point has not been commented by French tax authorities yet (see in this regard our last article on this matter).
Therefore we will wait with great interest the publication of any official comments.
In terms of action, managers now have to perform a preliminary analysis of their situation as from July 28, 2013, in order to determine the impact of the new provision on their input VAT recovery rights and payroll tax liability and consider potential solutions.