VAT & Pension Funds - Revenue's position following judgments of the CJEU

The VAT Manual has been updated to set out the VAT treatment applying to pension funds following decisions of the Court of Justice of the European Union (CJEU) in Wheels (Case C-424/11), ATP (Case C-464/12) and PPG (Case C-26/12).

1. VAT treatment of management services supplied to pension funds.

The CJEU ruled that defined contribution occupational pension schemes may be treated as "special investment funds" within the meaning of Article 135.1(g) of Council Directive 2006/112/EC where certain conditions are met. Revenue accepts as a consequence of the decision that a defined contribution scheme (within the meaning of the Pensions Act 1990) is regarded as a specified fund. Accordingly, the management of such schemes are exempt from VAT. One-member arrangements do not come within the scope of the exemption. See Part 05.71 of the VAT Manual.

The CJEU ruled that a defined benefit scheme cannot be regarded as special investment fund within the meaning of Article 135.1(g) of Council Directive 2006/112/EC. Consequently, fund managers should continue to charge VAT on services supplied to defined benefit pension schemes. See Part 05.72 of the VAT Manual.

2. VAT deductibility in respect of pension fund costs

The CJEU provided clarity on an employer’s entitlement to deductibility in the setting up and management of a pension fund for its employees. See Part 05.73 of the VAT Manual.

17 July 2015