VAT for Alternatives and Real Estates Funds

Introduction

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.

Objectives

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., HoldCo, 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' sphere.
• Points of attention: highlight of recent Luxembourg and CJEU legislative / case-law updates (namely covering recent K and DBKAG and Titanium ECJ's decisions).