RCB/6/14 VAT—CJEU judgment regarding deduction of VAT on pension fund management costs (PPG Holdings BV – C-26/12)

RCB/6/14 VAT—CJEU judgment regarding deduction of VAT on pension fund management costs (PPG Holdings BV – C-26/12)

Revenue & Customs Brief, Issue 6. 3 February 2014

1. Purpose of this Brief

This brief sets out HM Revenue & Customs' (HMRC) position following the decision of the Court of Justice of the European Union (CJEU) in Fiscale Eenheid PPG Holdings BV cs te Hoogezand (PPG). The case concerned an employer's entitlement to deduct VAT paid on services relating to the administration and management of a defined benefit pension scheme.

The CJEU ruled that, subject to certain conditions, the employer was entitled to deduct the VAT it paid on services relating to the administration of its employees' pensions and management of the assets of the pension fund set up to safeguard those pensions, where the pension fund was a legally and fiscally separate entity. The CJEU left it to the national court to determine whether those conditions were met in the case of PPG.

You can read the full text of the decision on the CURIA http://curia.europa.eu/jcms/jcms/j_6/ website.

1.1 Readership

This Revenue and Customs Brief is aimed at—

1.  

   —     businesses and other taxable entities that provide pension schemes for their employees

2.  

   —     pension fund management providers

3.  

   —     trustees of occupational pension funds

4.  

   —     tax advisers.

1.2 Background

PPG, a Dutch company, established a defined benefit pension scheme for its employees. PPG was required by law to establish a pension fund, which had to be legally and financially separate from PPG.

PPG received supplies of pension administration and investment management services