VAT issues for private equity funds
Produced in partnership with Emily Clark of Travers Smith
VAT issues for private equity funds

The following Tax guidance note Produced in partnership with Emily Clark of Travers Smith provides comprehensive and up to date legal information covering:

  • VAT issues for private equity funds
  • VAT treatment of an investment into a limited partnership fund
  • VAT treatment of the transfer of an interest in a limited partnership fund
  • VAT and the general partner
  • VAT on fund management services
  • What is a special investment fund
  • What is management?
  • How do these principles apply to the management of a private equity fund?
  • Management fees—UK fund and UK manager
  • Management fees—UK manager or adviser and non-EU fund
  • more

Brexit: As of exit day (31 January 2020) the UK is no longer an EU Member State. However, in accordance with the Withdrawal Agreement, the UK has entered an implementation period, during which it continues to be subject to EU law. This includes interpreting legislation relating to the EU as though the EU still included the UK and has an impact on this Practice Note. For further guidance, see Practice Note: Brexit—UK tax consequences.

This Practice Note looks at VAT issues arising in the context of private equity funds. It considers the VAT implications of dealings between a limited partnership fund and in particular the VAT treatment of:

  1. investments into a limited partnership fund, and

  2. transfers of interests in a limited partnership fund

It also considers whether VAT should be charged on the supply of advice and management services to the fund by analysing the law relating to the VAT exemption for the management of special investment funds.

For details on how an onshore private equity fund is structured, see Practice Note: Taxation of private equity funds—how is a fund structured?

For background information on VAT, see Practice Note: VAT basic principles—overview.

VAT treatment of an investment into a limited partnership fund

A cash commitment to a limited partnership in exchange for units or interests in that partnership is not a supply