“Administration de l’Enregistrement et des Domaines”, the Luxembourg VAT Authorities issued a Circular (Circular n° 723 ter) on 7th November 2013, confirming that risk management services for funds could be VAT exempt. The guidance from the tax authorities of Luxembourg specifies the scope of a VAT exemption applicable with respect to the management of investment funds.
The circular confirms that the risk management services are part of fund management services as such would be exempt from value added tax and would apply equally concerning the management of other investment funds. If a third party provided the management services generally forms a “distinct whole” essential for and specific to the management of funds in order to qualify for the value added tax (VAT) exemption. Furthermore it also provides the VAT exemption does not applicable to technical services or purely material as well as single isolated type of service supplied by a third party cannot get advantage from the VAT exemption.
