EC hearing on unfair VAT goes on stream.

Investment Adviser, December, 2006

vat exemption

The AIC's three-year fight to make investment trusts exempt from VAT has finally been heard in the European Court of Justice.

Unit trusts and Oeics do not incur VAT due to legislation laid down in the sixth European VAT directive that states special investment funds are exempt.

But the rules allow each member state to decide what constitutes a special investment fund, and the UK government opted to exclude investment trusts from this.

After three years of arguing with the government, the Association of Investment Companies finally appealed to the European Court of Justice to overturn the government's ruling on Wednesday.

However, the UK government opposed the association's stance, defending the right to...

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