Luxembourg, 21/10/2004 (Agence Europe) - The European Court of Justice has ruled in a case between the BBL and the Belgian State, in which it points out that the activities carried out by open-ended investment companies (SICAVs) are economic activities and those companies are therefore taxable persons for VAT purposes, a press release states. Management and consultancy services supplied to such companies are taxable under the legislation in force in the State in which the SICAVs have established their business. Accordingly, services supplied to SICAVs in Luxembourg by a bank established in Belgium are subject to Luxembourg law, the press release explains.
Banque Bruxelles Lambert (BBL), established in Belgium, supplied this kind of service to SICAVs in Luxembourg in relation to which it did not account for VAT, as it took the view that the services were provided in the Grand Duchy of Luxembourg and that SICAVs were not considered to be subject to VAT there. In 1998, the Belgian tax authorities assessed BBL to VAT recovery for the sum of EUR 140 000 000, including VAT and fines. BBL had challenged the assessment before the Court of First Instance in Brussels which asked the Court of Justice whether SICAVs established in a Member State are subject to VAT and, if so, where services supplied to them are to be treated as taking place.
The Court confirmed that SICAVs are taxable persons under Community law because their activities, which go beyond the mere acquisition and sale of securities, constitute economic activities. Accordingly, SICAVs come within the scope of the common system of VAT under the Sixth VAT Directive. The Court stated that it follows that, where services are supplied to SICAVs which are established in a Member State other than that of the supplier of the services, the place where those services are provided is the place where the SICAVs have established their business: "While the directive lays down the principle that the place where services are supplied is the place where the supplier has established his business, it nonetheless includes derogations to that principle, one of which provides that, where services of consultants and banking and financial transactions are performed for customers established in the Community but not in the same country as the supplier, the place where those services are provided is the place where the customer has established his business.
The Court of First Instance now has to rule in this case.