From 1st January 2020, the scope of the funds management exemption will be extended by effect of the new wording of the article 261 C 1° f of the French tax code (FTC) which transposes into national law article 135(1)(g) of the VAT Directive.
This provision will be in line with the interpretation given by the ECJ and the exemption will apply as well to UCITS but also to any (instead of those listed by the French tax Law up to now) other funds with similar characteristics to UCITS, including real estate funds (ECJ, C-595/13, 9 december 2015, Fiscale Eenheid X NV).
The management of real estate funds which is currently generally submitted to VAT would therefore become automatically exempt as from 1st January 2020.As you may know, it is however possible, in France, to opt for the taxation of financial transactions.
Operators who wish to keep on taxing the management of these funds shall be invited to elect before 1st January 2020 for the taxation of their financial transactions according to the provisions of article 260 B of the FTC. Please note that the election for VAT:
- mandatorily includes all financial transactions realised by the taxable person except those for which the option cannot apply;
- applies from the first day of the month following the option and for five years.
Please contact the authors or your CMS VAT contact for further assistance.
