Investment trusts now VAT exempt, rules ECJ.

Investment Adviser, July, 2007

Byline: AIC predicts that the judgement will save the investment industry AGBP40m a year

Tax

The European Court of Justice has ruled in favour of the AIC and JPMorgan Claverhouse Investment Trust, deciding that the management expenses of investment trusts should be exempt from VAT in the same way as unit trusts and Oeics.

According to AIC estimates, the judgment will save the investment industry around AGBP40m a year in VAT.

Additionally, the amount of VAT to be refunded in respect of past payments could be as high as AGBP300m.

The case revolves around the UK government's interpretation of the EU's sixth VAT directive, which exempts from VAT the "management of special investment funds as defined by member states".

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