The CJEU has issued its judgment case of Wheels Common Investment Fund Trustees Ltd (Wheels). The question asked of the Court was whether the occupational pension scheme operated by Wheels should be regarded for VAT purposes as, or similar to, a ‘special investment fund’ such that fund management services provided could be exempt from VAT.
In its judgement, the CJEU has confirmed that occupational schemes are not ‘special investment funds’. The judgement draws a clear distinction between collective investment funds (such as Unit Trusts etc) and pension schemes like the one operated by Wheels, the principal differences being that:
•an occupational pension scheme is an employment-related benefit which employers grant only to their employees and is not open to the public;
•unlike private investors with assets in a collective investment undertaking, members of an occupational pension scheme do not bear the risk arising from the management of the investment fund in which the scheme’s assets are pooled. The pension that may be received by an employee, who is a member of an occupational scheme, is defined in advance on the basis of length of service with the employer and of the amount of the salary, whereas the return that can be hoped for by persons who purchase units in a collective investment undertaking depends on the performance of the investments made by the fund’s managers over the period for which those persons hold the units.
Since the two types of fund are not identical and are not similar to funds that constitute ‘special investment funds’, the principle of fiscal neutrality is not offended by treating the two types of fund differently for VAT purposes.