VAT for alternative investment funds

Investment fund structures can be complex to manage from a tax perspective. In particular, with regards to indirect taxation, it is of the upmost importance to ensure the proper VAT treatment of investment operations, as VAT may easily become an important cost for the structure.

Depending on the nature of the performed operations, structures investing in alternative and real estate assets may face restrictions on their input tax recovery. It is critical to ensure that all different investment stages (and the corresponding contractual arrangements) take into account the VAT consequences that may arise therefrom.

The ensuing complexities should be identified and understood by businesses to ensure that the VAT position and compliance obligations in Luxembourg are correctly handled.

By the end of this training, the participants will be able to:

• determine the VAT profiles of the various entities involved in an investment structure;
• correctly determine the VAT treatment applicable to services acquired/supplied by the different entities in each phase of the investment;
• understand the implications of VAT exempt operations on the input VAT recovery;
• be aware of the VAT compliance obligations arising at each entity level in the investment structure;
• understand the main VAT differences between operations qualified as share deals vs operations qualified as asset deals;
• when real estate assets are involved, understand the VAT obligations and potential risks arising at (i) the purchase of the assets, (ii) during the use of the assets and (iii) at the exit phase.

• Overview of the VAT treatment applicable to the different flows of operations in the i) investment, ii) holding and iii) divestment phases of typical investment operations within the alternative and real estate sectors
• Effects of VAT exempt operations on the recovery of input VAT
• Definition of the VAT profile of each player participating in investment operations (e.g., holding companies, corporations, funds, GP, investment managers, investment advisors, service providers)
• Considerations on the particular VAT treatment of operations involving real estate (e.g., asset deals vs share deals; leasing of real estate (with or without option to tax), specific place of supply of services rules applicable)
• Overview of the VAT compliance obligations arising in each of the players' spheres
• Points of attention: highlight of recent Luxembourg and CJEU legislative/case-law updates (namely covering recent K and DBKAG and Titanium ECJ's decisions)

This training is coordinated by Marie-Isabelle Richardin, Tax Partner in the PwC VAT department.

Marie-Isabelle Richardin has been with PwC’s VAT practice since 2000. Her role at PwC is to assist operators in the financial services industry with their indirect-taxation strategies to help them comply with indirect-tax obligations. She also gained experience of the international tax world by working 2 years in New York. Marie-Isabelle is a regular speaker at conferences and training sessions on VAT for financial services. She is PwC Luxembourg’s representative in the VAT working groups such as the Luxembourg Investment Funds Association (ALFI), the European Fund and Asset Management Association (EFAMA) and she is chairwoman of the VAT group at LPEA.