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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> JP Morgan Fleming Claverhouse Investment Trust and The Association of Investment Trust Companies (Taxation) [2007] EUECJ C-363/05 (28 June 2007) URL: https://www.bailii.org/eu/cases/EUECJ/2007/C36305.html Cite as: [2008] STC 1180, [2007] EUECJ C-363/05, [2007] EUECJ C-363/5, [2007] ECR I-5517 |
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(Sixth VAT Directive Article 13B(d)(6) Exemption Special investment funds Meaning Definition by the Member States Discretion Limits Closed-ended funds)
In Case C-363/05,
REFERENCE for a preliminary ruling under Article 234 EC, from the VAT and Duties Tribunal, London (United Kingdom), made by decision of 19 September 2005, received at the Court on 26 September 2005, in the proceedings
JP Morgan Fleming Claverhouse Investment Trust plc,
The Association of Investment Trust Companies
v
The Commissioners of HM Revenue and Customs,
composed of A. Rosas (Rapporteur), President of the Chamber, J. Klučka, U. Lõhmus, A. à Caoimh and P. Lindh, Judges,
Advocate General: J. Kokott,
Registrar: L. Hewlett, Principal Administrator,
having regard to the written procedure and further to the hearing on 13 December 2006,
after considering the observations submitted on behalf of:
JP Morgan Fleming Claverhouse Investment Trust plc, by K.P.E. Lasok QC and M. Angiolini, Barrister, instructed by A. Khan, Solicitor,
the United Kingdom Government, by C. Gibbs and R. Hill, acting as Agents,
the Commission of the European Communities, by R. Lyal and M. Afonso, acting as Agents,
after hearing the Opinion of the Advocate General at the sitting on 1 March 2007,
gives the following
Legal context
The Community legislation
'management of special investment funds as defined by Member States.'
-1. The Member States shall apply this Directive to undertakings for collective investment in transferable securities (hereinafter referred to as UCITS) situated within their territories.
2. For the purposes of this Directive, and subject to Article 2, UCITS shall be undertakings:
the sole object of which is the collective investment in transferable securities and/or in other liquid financial assets referred to in Article 19(1) of capital raised from the public and which operates on the principle of risk-spreading and,
the units of which are, at the request of holders, re-purchased or redeemed, directly or indirectly, out of those undertakings' assets. Action taken by a UCITS to ensure that the stock exchange value of its units does not significantly vary from their net asset value shall be regarded as equivalent to such re-purchase or redemption.
...
3. Such undertakings may be constituted according to law, either under the law of contract (as common funds managed by management companies) or trust law (as unit trusts) or under statute (as investment companies).'
'Whereas the coordination of the laws of the Member States should be confined initially to collective investment undertakings other than of the closed-ended type which promote the sale of their units to the public in the Community and the sole object of which is investment in transferable securities (which are essentially transferable securities officially listed on stock exchanges or similar regulated markets); whereas regulation of the collective investment undertakings not covered by the Directive poses a variety of problems which must be dealt with by means of other provisions, and such undertakings will accordingly be the subject of coordination at a later stage; ...'
National legislation
The main proceedings and the questions referred for a preliminary ruling
-1. Are the words 'special investment funds' in Article 13B(d)(6) of the Sixth Directive capable of including closed-ended investment funds, such as ITCs?
2. If the answer to the first question is in the affirmative, does the phrase 'as defined by Member States' in Article 13B(d)(6):
(a) allow Member States to select certain of the 'special investment funds' within their jurisdiction to benefit from the exemption of the supply of management services and exclude others from the exemption, or
(b) does it mean that the Member States are to identify those funds within their jurisdiction which fall within the definition of 'special investment funds' and that the benefit of exemption should extend to all such funds?
3. If the answer to the second question is that Member States can select which 'special investment funds' benefit from the exemption, how do the principles of fiscal neutrality, equal treatment and the prevention of distortion of competition affect the exercise of that discretion?
4. Does Article 13B(d)(6) have direct effect?'
The questions referred for a preliminary ruling
Preliminary remarks
The first question
The second and third questions
The fourth question
Costs
On those grounds, the Court (Third Chamber) hereby rules:
1. Article 13B(d)(6) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes Common system of value added tax: uniform basis of assessment must be interpreted as meaning that the words 'special investment funds' in that provision are capable of including closed-ended investment funds, such as Investment Trust Companies.
2. Article 13B(d)(6) of Sixth Directive 77/388 must be interpreted as meaning that it allows Member States a discretion in defining the funds located on their territory which are covered by the notion of 'special investment funds' for the purposes of the exemption provided for by that provision. However, in the exercise of that power, the Member States must respect the objective pursued by that provision, which is to facilitate investment in securities for investors through investment undertakings, while guaranteeing the principle of fiscal neutrality from the point of view of the levying of VAT on the management of special investment funds which are in competition with other special investment funds such as funds falling within the scope of Council Directive 85/611/EEC of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS), as amended by Directive 2005/1/EC of the European Parliament and of the Council of 9 March 2005.
3. Article 13B(d)(6) of Sixth Directive 77/388 has direct effect, in that it can be relied on by a taxable person before a national court in order to challenge the application of national legislation alleged to be incompatible with that provision.
[Signatures]
* Language of the case: English.