C-464/12 ATP PensionService

JUDGMENT OF THE COURT (Fifth Chamber)

13 March 2014 ( *1 )

‛Sixth VAT Directive — Exemptions — Article 13B(d)(3) and (6) — Special investment funds — Occupational pension schemes — Management — Transactions concerning deposit and current accounts, payments or transfers’

In Case C‑464/12,

REQUEST for a preliminary ruling under Article 267 TFEU from the Østre Landsret (Denmark), made by decision of 8 October 2012, received at the Court on 17 October 2012, in the proceedings

ATP PensionService A/S

v

Skatteministeriet,

THE COURT (Fifth Chamber),

composed of T. von Danwitz, President of the Chamber, E. Juhász, A. Rosas (Rapporteur), D. Šváby and C. Vajda, Judges,

Advocate General: P. Cruz Villalón,

Registrar: C. Strömholm, Administrator,

having regard to the written procedure and further to the hearing on 2 October 2013,

after considering the observations submitted on behalf of:

ATP PensionService A/S, by H.S. Hansen and T. Kristjánsson, advokater,

the Danish Government, by V. Pasternak Jørgensen, acting as Agent, assisted by K. Lundgaard Hansen, advokat,

the United Kingdom Government, by R. Hill, Barrister,

the European Commission, by L. Lozano Palacios, M. Clausen and C. Barslev, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 12 December 2013,

gives the following

Judgment

Legal context and the dispute

1This request for a preliminary ruling concerns the interpretation of Article 13B(d)(3) and (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 (OJ 1977 L 145, p. 1; ‘the Sixth Directive’).

2The request has been made in proceedings between ATP PensionService A/S (‘ATP’) and the Skatteministeriet (Danish Ministry of Fiscal Affairs) concerning the latter’s refusal to exempt from value added tax (‘VAT’) the supply by ATP of certain services to occupational pension funds.

Legal context

European Union (‘EU’) law

3Article 13B(d) of the Sixth Directive is worded as follows:

‘Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of the exemptions and of preventing any possible evasion, avoidance or abuse:

…

the following transactions:

…

3transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection and factoring;

…

6management of special investment funds as defined by Member States’.

4Article 1(2) 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) (OJ 1985 L 375, p. 3), as amended by Directives 2001/107/EC and 2001/108/EC of the European Parliament and of the Council of 21 January 2002 (OJ 2002 L 41, p. 20, and OJ 2002 L 41, p. 35, respectively) (‘Directive 85/611’) defines those undertakings as follows:

‘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.’

5Under the second subparagraph of Article 5(2) of Directive 85/611, ‘[t]he activity of management of unit trusts/common funds and of investment companies includes, for the purpose of this Directive, the functions mentioned in Annex II which are not exhaustive’.

6Annex II to that directive mentions the following as ‘[f]unctions included in the activity of collective portfolio management’:

Investment management

Administration:

legal and fund management accounting services;

customer inquiries;

valuation and pricing (including tax returns);

regulatory compliance monitoring;

maintenance of unit-holder register;

distribution of income;

unit issues and redemptions;

contract settlements (including certificate dispatch);

record keeping.

Marketing’.

7Article 5g(1) of Directive 85/611 made it possible for Member States to ‘permit management companies to delegate to third parties for the purpose of a more efficient conduct of the companies’ business to carry out on their behalf one or more of their own functions’ so long as the mandate complies with the conditions listed in Article 5g(1)(a) to (i).

Danish law

The Danish pension system

8The Østre Landsret (Eastern Regional Court; or ‘the referring court’) describes the Danish pension system as follows.

9It explains that the system is organised on the basis of three main types of scheme: (i) the statutory pension scheme (including the folkepension or State pension); (ii) supplementary occupational retirement schemes; and (iii) supplementary personal pension plans. Whereas the scheme in group (i) is financed by taxation, the schemes in groups (ii) and (iii) (supplementary retirement schemes) are funded by the persons to whom the retirement benefit is to be paid, namely, ‘the pension customers’.

10Supplementary retirement schemes (groups (ii) and (iii)) are normally funded by regular payments into a pension scheme managed by either a pension institution (including a pension fund) or a financial institution. In the case of occupational retirement schemes (group (ii)), the employer normally pays a pension contribution – on behalf of its employees – into a pension fund, but such payment may also be made to a financial institution.

11Supplementary retirement schemes (groups (ii) and (iii)) are normally funded by defined contributions, which means that the amount of the pension contribution is determined by agreement, whereas the amount of the pension paid out depends, on the one hand, on the size of the fund accumulated from contributions and, on the other hand, on the return from their investment (after deduction of scheme-related costs).

12The pension paid out from a supplementary retirement scheme may take one of the following forms:

a life annuity, which is paid until the death of the pension customer;

an instalment pension, which can be paid in instalments from the date on which the pension becomes due; or

a capital pension, which can be paid as a lump sum on the date on which the pension becomes due.

13In the case of a life annuity, the pension customer can have a regular amount paid out from the date on which the pension becomes due until that person’s death. That amount is calculated partly on the basis of the average life expectancy of pension customers and partly on the basis of the amount accumulated at the date on which the pension becomes due. A pension customer can apply the accumulated fund to an instalment pension or a capital pension in order to purchase a life annuity or to make a further contribution to an existing life annuity.

14Contributions paid into a supplementary retirement scheme are deductible under Danish income tax law within certain quantitative limits, irrespective of whether such contributions are paid into a retirement scheme which is managed by a pension institution or one which has been set up by a financial institution.

15The decision regarding the amount of any contribution to be paid into a retirement scheme and regarding whether such contributions are to be paid out in the form of a life annuity, an instalment pension or a capital pension is made by the pension customer.

16However, in the case of supplementary occupational retirement schemes (group (ii)), it is typically employers’ organisations and trade unions representing individual employers and employees which agree on pension arrangements for employees as part of periodic collective agreement negotiations.

17For employees covered by such collective agreements, the agreed pension contribution will thus normally be paid into a pension fund (occupational pension fund). In addition to the compulsory pension contribution, employees may choose to make extra contributions to the occupational retirement scheme, or they may choose to set up a personal retirement savings plan with a financial institution.

18Personal pension plans (group (iii)) also attract contributions from persons who are not covered by a pension scheme because of their employment situation, such as self-employed members of the professions, employers and directors. However, such persons may also opt to make contributions to an occupational retirement scheme (group (ii)) if the undertaking in question makes provision for such a scheme in respect of its staff.

Danish VAT legislation

19Under points (c) and (f) of Paragraph 13(1)(11) of the Momsloven (Law on VAT):

‘The following goods and services shall be exempt from [VAT]:

…

11the following financial activities:

…

transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection and factoring;

…

management of special investment funds’.

20Den Juridiske Vejledning (Legal Guidance Note) 2012-2, D.A.5.11.6, which contains official guidelines from the authorities for the interpretation of the Momsloven, states that the VAT exemption for transactions concerning deposit or current accounts covers, inter alia, the opening of deposit accounts and the setting up of retirement savings plans and other savings plans, and the crediting and withdrawal of sums to and from such accounts.

21Regarding transactions concerning payments and transfers, those guidelines state that such transactions ‘involve the transfer of funds in cash, either electronically – for example using a central computer system or SWIFT (the Society for Worldwide Interbank Financial Telecommunication) – or on the basis of documents drawn up under specific conditions. Payments, transfers and payment processing may be delegated to a subcontractor, such as PBS (Payment Business Services A/S)’.

22Guidance Note D.A.5.11.9.3 states that the management of special investment funds may include the following:

day-to-day portfolio management, including accounting;

advice and decision-making on the investment of funds and the execution of purchases and sales of transferable securities for the fund;

calculation of the intrinsic value of fund units;

issue and redemption of fund units; and

other administrative services, including IT, prospectuses, marketing, business management, and development and analysis.

23Guidance Note D.A.5.11.9.3 also indicates that the VAT exemption rule is to cover the management of special investment funds, irrespective of whether management is provided by the fund itself, by a management company or by another undertaking which has been lawfully authorised to do so.

24In Section 2 of the order for reference, the Østre Landsret states that Guidance Note D.A.5.11.9.2 describes a special investment fund as follows:

‘[The Skatterådet (National Tax Board)] has acted on the ruling by the Court of Justice [in Case C-363/05 JP Morgan Fleming Claverhouse Investment Trust and The Association of Investment Trust Companies [2007] ECR I-5517 (“JP Morgan Fleming”)] in a binding answer (bindende svar). In its answer, the Skatterådet specifies the special investment funds which, according to Danish case-law, are considered to be covered by the VAT exemption rule. See SKM 2008.353.SR.

The following [special] investment funds are covered by the VAT exemption rule laid down in point (f) of Paragraph 13(1)(11) of the Momsloven:

1Special investment funds and other [UCITS] covered by [Directive 85/611];

2Special investment funds which manage accounts; see paragraph 2 of the Lov om beskatning af medlemmer af kontoførende investeringsforeninger (Law on the taxation of members of special investment funds which manage accounts), irrespective of whether such funds are covered by [Directive 85/611];

3Distribution investment funds covered by subparagraph 1 of paragraph 16C of the Ligningsloven (Law on tax assessment), irrespective of whether they are covered by [Directive 85/611];

4Investment companies/funds covered by subparagraphs 2, 3 and 4 of paragraph 19 of the Aktieavancebeskatningsloven (Law on the taxation of capital gains upon disposal of shares), irrespective of whether they are covered by [Directive 85/611];

5Certificate-issuing accumulation funds covered by subparagraph 1(5a) of paragraph 1 of the Serviceloven (Law on Social Services), irrespective of whether they are covered by [Directive 85/611];

6ITCs (investment trust companies); see [JP Morgan Fleming], irrespective of whether they are covered by points 2 to 5;

7Other UCITS which, on the basis of a specific assessment, may be considered to offer services which are comparable to and in competition with the services which special investment funds covered by points 1 to 6 offer to members, shareholders and so on with a view to the diversification of risks on investment in transferable securities.’

Facts in the main proceedings and the questions referred for a preliminary ruling

25The referring court describes the facts in the case before it as follows.

26ATP’s main customer is PensionDanmark, which is an occupational pension fund. PensionDanmark administers pension schemes, set up under collective agreements and company agreements, on behalf of 12 trade unions and 37 employers’ organisations covering a total of 602000 members employed in 22000 private and public undertakings.

27The process in the context of which ATP provides its services is as follows. On the basis of information received from the employer, ATP opens an account for each pension customer who is a member of one of the pension funds included in the pension scheme managed by ATP. The employer informs ATP of the pension contributions which are payable for all its employees and transfers a single amount, representing the total sum of those contributions, to the pension fund’s account at a financial institution. The amount payable to each individual employee by the employer under the collective agreement or company agreement is then credited by ATP to the employee’s account in the pension scheme system managed by ATP.

28The pension customer has access to his pension account at any time through the pension fund’s homepage. ATP updates all accounts regularly with the amounts to be credited and the amounts to be withdrawn, so that the balance of any account is equal to the amount of retirement benefit accumulated (excluding income earned but not yet credited).

29ATP also initiates the withdrawal of amounts from the accounts of pension customers who are members of a pension fund by issuing instructions to a financial institution to pay such amounts to those pension customers.

30The pension funds themselves invest any contributions paid into the retirement schemes.

31ATP thus carries out the following tasks on behalf of pension funds:

administrative tasks, consisting, inter alia, in the provision of information and specific advice to employers and employees (pension customers) in relation to the retirement schemes provided by the pension funds;

system maintenance and development in relation to the development and maintenance of the platform from which ATP provides its services to pension funds;

services related to payments into and disbursements from pension funds.

32Until 30 June 2002, ATP paid VAT on the consideration received from pension funds for those services. In the light of the judgment in Case C-2/95 SDC [1997] ECR I-3017, however, ATP concluded that the services relating to payments into and disbursements from pension funds represented transactions concerning payments or transfers, which are exempt from VAT under Article 13B(d)(3) of the Sixth Directive.

33ATP informed the Skatteministeriet of this on 26 June 2002. By decision of 7 October 2005, the Skatteministeriet ruled that ATP’s services in connection with pension disbursements were VAT-exempt transactions concerning payments or transfers, but it rejected the claim that services concerned with payments into retirement schemes were exempt from VAT – with the exception of services relating to the taking and cashing of cheques. By order of 13 May 2009, the Landsskatteretten (National Tax Tribunal) upheld the Skatteministeriet’s decision.

34ATP contested that order before the Retten i Hillerød (Hillerød Court), which in turn referred the case to the Østre Landsret.

35In Section 1.2 of the order for reference, the Østre Landsret stated that the services which the Skatteministeriet and the Landsskatteretten did not consider to be exempt from VAT are, essentially, the following:

Registration of employers liable to pay pension contributions, on the basis of information received from those employers.

2Opening of accounts in the pension scheme system at ATP for the benefit of employees (pension customers), on the basis of information received from employers.

3Provision of facilities for the handling of payments from employers, so that all pension contributions for the employees of each employer can be paid into the pension fund account at a financial institution using an online service (internet) or a payment card.

4Receipt and registration of reports from employers on the allocation of the total amount to individual employees (including the calculation and charging of labour market contributions, which are derived directly from the pension fund payments made).

5Crediting the pension contribution to the individual pension customer’s account in the pension scheme system at ATP, including regular updating of the account with inward payments and income recorded.

6Recording of missing payments.

7Reporting to pension fund customers on contributions paid into capital pension schemes.

8Sending out account statements.’

36Before the referring court, ATP submitted that those services should be exempt from VAT as being:

management of special investment funds under point (f) of Paragraph 13(1)(11) of the Momsloven, which implements Article 13B(d)(6) of the Sixth Directive; and/or

transactions concerning deposit and current accounts, payments or transfers under point (c) of Paragraph 13(1)(11) of the Momsloven, which implements Article 13B(d)(3) of the Sixth Directive.

37The Skatteministeriet found that those services provided by ATP cannot be exempt from VAT, on the ground that pension funds differ from special investment funds in the following ways:

pension funds combine retirement scheme and insurance services; pensions paid out may take the form of either a life annuity or a pension which is paid as a lump sum or as regular payments over a certain number of years; pension funds provide supplementary insurance cover, for example, in the event of death or incapacity for work;

it is employers, not employees, who pay contributions into the fund under collective agreements;

the purpose of a retirement scheme is to create a balance between income received in working life and in retirement, whereas the usual purpose of investment is to increase wealth;

pursuant to the Danish income tax rules, contributions to pension funds are to a certain extent deductible from taxable income.

38In those circumstances, the Østre Landsret decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

Is Article 13B(d)(6) of [the Sixth Directive] to be interpreted as meaning that the term “special investment funds as defined by Member States” covers pension funds such as those referred to in the [present case] and having the following characteristics, where the Member State recognises the institutions presented in Section 2 of the … order for reference [as reproduced in paragraphs 19 to 24 above] as special investment funds:

the return to the employee (the pension customer) depends on the yield realised by the pension fund’s investments;

the employer is not required to make supplementary payments in order to secure a particular return for the pension customer;

the pension fund collectively invests the funds accumulated applying a risk-spreading principle;

the bulk of the payments into the pension fund is based on collective agreements between labour-market organisations representing the individual employees and employers, and not on the personal decision of the individual employee;

the individual employee may decide, on a personal basis, to make additional contributions to the pension fund;

self-employed traders, employers and directors may opt to pay pension contributions into the pension fund;

a predetermined portion of the pension savings collectively agreed for the employees is used to purchase a life annuity;

the pension customers bear the pension fund’s costs;

payments into the pension fund are deductible for the purposes of national income tax within certain quantitative limits;

payments into a personal pension plan, including a pension fund set up with a financial institution under which the contributions can be invested in a special investment fund, are deductible for the purposes of national income tax to the same extent as under point (i);

the counterpart to the entitlement to deduct contributions for tax purposes under point (i) is that disbursements are taxed; and

the funds accumulated are in principle to be paid out after the person concerned reaches pensionable age?

If Question 1 is answered in the affirmative, is Article 13B(d)(6) of the Sixth Directive to be interpreted as meaning that the term “management” covers a service such as that at issue in the [present case] (see Section 1.2 of the order for reference [and paragraph 35 above])?

Is a service such as that at issue in the [present case] concerning pension payments (see Section 1.2 of the order for reference [and paragraph 35 above]) to be regarded under the terms of Article 13B(d)(3) of the Sixth Directive as a single service or as several separate services which are to be assessed independently?

Is Article 13B(d)(3) of the Sixth Directive to be interpreted as meaning that the VAT exemption laid down in that provision for transactions concerning payments or transfers covers a service such as that at issue in the [present case] concerning pension payments (see Section 1.2 of the order for reference [and paragraph 35 above])?

If Question 4 is answered in the negative, is Article 13B(d)(3) of the Sixth Directive to be interpreted as meaning that the VAT exemption provided for under that provision for transactions concerning deposit and current accounts covers a service such as that at issue in the [present case] concerning pension payments (see Section 1.2 of the order for reference [and paragraph 35 above])?’

Consideration of the questions referred

Question 1, concerning the term ‘special investment fund’

39By its first question, the referring court asks whether, on a proper construction of Article 13B(d)(6) of the Sixth Directive, the term ‘special investment funds as defined by Member States’ used in that provision covers pension funds, such as those at issue in the main proceedings, which have the characteristics listed in that question.

40It should be borne in mind from the outset that, according to settled case-law, whilst the exemptions provided for in, inter alia, Article 13B(d)(6) of the Sixth Directive are autonomous concepts of EU law which must, in principle, be given a common definition in order to avoid divergences in the application of the VAT system from one Member State to another, so that the Member States cannot alter their content, that is not the case where the legislature has conferred on the Member States the task of defining certain terms of an exemption (see, to that effect, Case C-169/04 Abbey National [2006] ECR I-4027, paragraphs 38 and 39; JP Morgan Fleming, paragraphs 19 and 20; and Case C‑424/11 Wheels Common Investment Fund Trustees and Others [2013] ECR (‘Wheels’), paragraph 16). As it is, Article 13B(d)(6) of the Sixth Directive confers upon the Member States the task of defining the meaning of ‘special investment funds’ (see Wheels, paragraph 16).

41The power to define thereby accorded to the Member States is, however, limited by the prohibition on undermining the very terms of the exemption that are employed by the EU legislature (see, to that effect, JP Morgan Fleming, paragraph 21, and Wheels, paragraph 17). A Member State cannot in particular, without negating the very terms ‘special investment funds’, select from among special investment funds those which are eligible for the exemption and those which are not. Article 13B(d)(6) of the Sixth Directive thus grants a Member State only the power to identify, through its domestic law, the funds which meet the definition of ‘special investment funds’ (see, to that effect, JP Morgan Fleming, paragraphs 41 to 43, and Wheels, paragraph 17).

42The power to define the meaning of ‘special investment funds’ must also be exercised consistently with the objectives pursued by the Sixth Directive and with the principle of fiscal neutrality inherent in the common system of VAT (see, to that effect, JP Morgan Fleming, paragraphs 22 and 43, and Wheels, paragraph 18).

43In that regard, it should be observed that the objective of exempting transactions connected with the management of special investment funds is, in particular, to facilitate investment in securities through investment undertakings by excluding the cost of VAT and, in that way, ensuring that the common system of VAT is neutral as regards the choice between direct investment in securities and investment through UCITS (see, to that effect, Abbey National, paragraph 62; JP Morgan Fleming, paragraph 45; Wheels, paragraph 19; and Case C‑275/11 GfBk [2013] ECR, paragraph 30).

44Specifically, the principle of fiscal neutrality precludes economic operators carrying out the same transactions from being treated differently in relation to the levying of VAT (see, to that effect, Abbey National, paragraph 56; JP Morgan Fleming, paragraph 29; and Wheels, paragraph 20).

45It must therefore be determined, for the purposes of applying the Sixth Directive, whether pension funds such as those at issue in the main proceedings constitute ‘special investment funds’ for the purposes of Article 13B(d)(6) of that directive.

46In that regard, it should be borne in mind that funds which constitute UCITS within the meaning of Directive 85/611 also constitute special investment funds (see, to that effect, inter alia, Case C‑44/11 Deutsche Bank [2012] ECR, paragraphs 31 and 32, and Wheels, paragraph 23).

47Furthermore, funds which – without being UCITS within the meaning of Directive 85/611 – display characteristics identical to those of UCITS and thus carry out the same transactions or, at least, display features that are sufficiently comparable for them to be in competition with such undertakings must also be regarded as special investment funds (see, to that effect, Abbey National, paragraphs 53 to 56; JP Morgan Fleming, paragraphs 48 to 51; and Wheels, paragraph 24).

48As the Advocate General stated in point 51 of his Opinion, it is common ground that occupational pension funds such as those at issue in the case before the referring court are not covered by Directive 85/611. It is important, however, to establish whether such funds are comparable to undertakings which do fall within the scope of that directive and whether they are in competition with such undertakings.

49In that regard, Article 1(2) of Directive 85/611 states that the directive covers any undertaking the sole object of which is the collective investment in transferable securities and/or in other liquid financial assets 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 that undertaking’s assets.

50Such undertakings are those in which many investments are pooled and spread over a range of transferable securities which can be managed effectively in order to optimise results, and in which individual investments may be relatively modest. Such funds manage their investments in their own name and on their own behalf, while each investor owns a share of the fund but not the fund’s investments as such (Deutsche Bank, paragraph 33).

51The essential characteristic of a special investment fund is the pooling of assets of several beneficiaries, enabling the risk borne by those beneficiaries to be spread over a range of securities. From the statements provided by the referring court, this appears to be the situation in the case before it, as groups (ii) and (iii) of the Danish pension system schemes are funded by the persons to whom the retirement benefit is to be paid. Moreover, the referring court states – in Question 1(c) – that the sums in question are invested using a risk‑spreading principle and – in Question 1(a) – that the pension customers bear the investment risk.

52In that regard, it is important to distinguish the investment fund at issue in the main proceedings from the fund at issue in Wheels: in Wheels, the members of the scheme did not bear the risk arising from the management of the investment fund in which the scheme’s assets were pooled, because the pension was defined in advance on the basis of length of service with the employer and the amount of the salary; and the contributions paid into the scheme by the employer were a means by which the employer complied with his legal obligations towards his employees (see Wheels, paragraphs 27 to 29). By contrast, as mentioned in paragraph 51 above, the schemes at issue in the case before the referring court are funded by the persons to whom the retirement benefit is to be paid and those persons bear the investment risk.

53For the purposes of determining whether an undertaking constitutes a special investment fund, the fact that the contributions are paid by the employer is irrelevant: the employer may be under an obligation to transfer to the pension fund sums corresponding to employees’ contributions. Physical involvement of that kind does not alter the fact that the contributions are paid on behalf of the pension customers using funds which must be regarded as reverting to them as a result of their work and that those customers bear the risks of any investments made using those contributions. In that regard, the referring court states – in Question 1(b) – that employers are not required to make supplementary payments in order to secure a particular return for pension customers.

54The fact that the amount paid into the pension fund is based on collective agreements between labour-market organisations is also irrelevant: it does not alter the fact that the contribution is paid by the worker (or at least in his name and on his behalf), that he will benefit from the proceeds of his investments and that he also bears any risks in that connection. By the same token, it is of little consequence that workers have the option of making additional contributions or that other persons may contribute to the pension fund through personal retirement savings plans.

55Nor does the fact that the funds accumulated may be paid out as a lump sum or in instalments after the pension customer concerned reaches pensionable age call in question the essential characteristics of the savings invested in pension funds. These merely reflect different ways of calculating the amount to be paid out and, as the Advocate General stated in point 59 of his Opinion, transfers between the various options can be made by means of a simple financial transaction.

56By the same token, contrary to the Danish Government’s assertions, the fact that contributions to a pension fund may be deductible from taxable income under income tax law cannot have any impact on whether or not pension fund activities are exempt from VAT: national income tax legislation cannot call in question the uniform nature of the exemptions provided for under the EU VAT rules.

57Lastly, the addition of an insurance element does not call in question the essential characteristics of contributions to pension funds where that insurance element is an ancillary aspect.

58Indeed, the Court has held in that regard that there is a single supply, particularly where one element is to be regarded as constituting the principal service, whilst another is to be regarded as an ancillary service sharing the tax treatment of the principal service (Deutsche Bank, paragraph 19 and the case-law cited). That is also the case where two or more elements or acts supplied by the taxable person are so closely linked that they form, objectively, a single, indivisible economic supply, which it would be artificial to split (see Deutsche Bank, paragraph 21 and the case-law cited).

59In the light of all of the foregoing, the answer to Question 1 is that, on a proper construction of Article 13B(d)(6) of the Sixth Directive, pension funds such as those at issue in the main proceedings may fall within the scope of that provision if they are funded by the persons to whom the retirement benefit is to be paid, if the savings are invested using a risk‑spreading principle, and if the pension customers bear the investment risk. In that regard, it is of little consequence that the contributions are paid by the employer; that the amount paid in is based on collective agreements between labour-market organisations; that there are different ways of paying out the savings invested; that contributions are deductible under income tax law; or that it is possible to add an insurance element which is ancillary to the other services provided.

Question 2, concerning the term ‘management of special investment funds’

60By its second question, the referring court asks whether, on a proper construction of Article 13B(d)(6) of the Sixth Directive, the term ‘management of special investment funds’ used in that provision covers a service such as that at issue in the main proceedings.

61As Article 13B(d)(6) of the Sixth Directive offers no definition of the term ‘management of special investment funds’, that provision must be interpreted in the light of the context in which it is used and of the aims and scheme of that directive, with particular regard to the underlying purpose of the exemption which it establishes (see Abbey National, paragraph 59).

62First, it should be noted in that regard that, as mentioned in paragraph 43 above, the aim underlying the exemption of transactions connected with the management of special investment funds is, in particular, to facilitate investment in securities through investment undertakings.

63Secondly, the wording of Article 13B(d)(6) of the Sixth Directive does not in principle preclude the management of special investment funds from being broken down into a number of separate services which may then come within the meaning of the term ‘management of special investment funds’ as used in that provision, and may benefit from the exemption under it, even where they are provided by a third-party manager (see Abbey National, paragraph 67, and GfBk, paragraph 28).

64Thirdly, it follows from the principle of fiscal neutrality that operators must be able to choose the form of organisation which, from a strictly commercial point of view, best suits them, without running the risk of having their transactions excluded from the exemption under Article 13B(d)(6) of the Sixth Directive (see Abbey National, paragraph 68, and GfBk, paragraph 31).

65Fourthly, the Court has made it clear that the transactions covered by that exemption are those which are specific to the business of UCITS (see Abbey National, paragraph 63). In particular, it has found that management services provided by a third‑party manager must, viewed broadly, form a distinct whole and be specific to, and essential for, the management of special investment funds (see, to that effect, Abbey National, paragraphs 70 to 72, and GfBk, paragraph 21).

66Functions specific to UCITS include, besides portfolio management functions, functions for administering the UCITS themselves, such as those set out – under the heading ‘Administration’ – in Annex II to Directive 85/611 (see Abbey National, paragraph 64, and GfBk, paragraph 22).

67However, the fact that services are not listed in Annex II to Directive 85/611 does not preclude their inclusion in the category of specific services falling within activities for ‘management of special investment funds’ within the meaning of Article 13B(d)(6) of the Sixth Directive, since Article 5(2) of Directive 85/611 itself emphasises that the list in that annex is ‘not exhaustive’ (GfBk, paragraph 25).

68Thus, the Court has held that services such as computing the amount of income and the price of units or shares, the valuation of assets, accounting, the preparation of statements for the distribution of income, the provision of information and documentation for periodic accounts and for tax, statistical and VAT returns, and the preparation of income forecasts are covered by the concept of ‘management’ of a special investment fund for the purposes of Article 13B(d)(6) of the Sixth Directive (see GfBk, paragraph 27).

69By the same token, the fact that services provided by a third party do not alter the fund’s legal and financial position does not preclude them from being covered by the concept of ‘management’ of a special investment fund, for the purposes of that provision (GfBk, paragraph 26).

70The services in respect of which eligibility for VAT exemption is contested in the case before the referring court are listed in paragraph 35 above. It appears prima facie that some of those services are not of a purely technical nature; rather, through the opening of accounts in the pension funds system and the crediting to those accounts of the contributions paid, they establish the rights of pension customers vis-à-vis the pension funds. The transactions by which contributions are credited to pension customers’ accounts appear to have the effect of transforming the claim held by a worker vis-à-vis his employer into a claim that the worker holds vis-à-vis the pension fund.

71In those circumstances, transactions crediting contributions to such accounts are essential to the management of a special investment fund.

72The principle of fiscal neutrality supports that conclusion: if such services were to be made subject to VAT when provided by a third party, that would give pension funds which have decided to record themselves the contributions made by pension customers an advantage over those which have decided to make use of a third party for that purpose, even though subcontracting such services could provide advantages in terms of efficiency to pension funds and thus to their customers (see, to that effect, GfBk, paragraph 31).

73The other services referred to in paragraph 35 above appear to be, essentially, accounting services and account information services, which are covered by Annex II to Directive 85/611.

74As regards services such as those at issue in the main proceedings, it appears prima facie essential for the entity that holds pension customers’ accounts to process the necessary data provided by employers or to determine whether contributions are missing. Moreover, it would seem that such an entity is the best placed to determine any amounts still to be paid into pension funds by employers or to send out statements relating to those accounts.

75However, it is for the referring court, which has before it all the information it needs to analyse each of the transactions at issue in the main proceedings, to assess whether the term ‘management of special investment funds’, used in Article 13B(d)(6) of the Sixth Directive, as interpreted in the present judgment, covers those services.

76In the light of the foregoing, the answer to Question 2 is that, on a proper construction of Article 13B(d)(6) of the Sixth Directive, the term ‘management of special investment funds’ used in that provision covers services by means of which an undertaking establishes the rights of pension customers vis-à-vis pension funds through the opening of accounts in the pension scheme system and the crediting to such accounts of the contributions paid. That term also covers accounting services and account information services such as those listed in Annex II to Directive 85/611.

Questions 3 and 4, concerning transactions relating to payments and transfers

77By its third and fourth questions, which it is appropriate to examine together, the referring court asks whether, on a proper construction of Article 13B(d)(3) of the Sixth Directive, the VAT exemption laid down in that provision for transactions concerning payments or transfers covers a service, such as that at issue in the main proceedings, which relates to contributions paid into a pension fund, and whether a service of that kind must be regarded as a single service or as a group of separate services, each of which must be assessed independently.

78It should be borne in mind that the transactions exempted under Article 13B(d)(3) of the Sixth Directive are defined in terms of the nature of the services provided and not in terms of the person supplying or receiving the service (see SDC, paragraphs 32 and 56, and Case C-175/09 Axa UK [2010] ECR I-10701, paragraph 26). Accordingly, the exemption is not subject to the condition that the transactions be effected by a certain type of institution or legal person where the transactions in question relate to the sphere of financial transactions (see, to that effect, SDC, paragraph 38, and Axa UK, paragraph 26).

79The Court has held that a transfer is a transaction consisting in the execution of an order for the transfer of a sum of money from one bank account to another. It is characterised in particular by the fact that it involves a change in the legal and financial situation existing, on the one hand, between the person giving the order and the recipient and, on the other, between those parties and their respective banks; and, in some cases, between those banks. Moreover, the transaction which produces the change is solely the transfer of funds between accounts, irrespective of its cause (see, to that effect, SDC, paragraph 53, and Case C-350/10 Nordea Pankki Suomi [2011] ECR I-7359, paragraph 25).

80That interpretation does not presuppose any particular method for effecting transfers, which may be done using accounting entries. That is so in the case of transfers between customers of a single bank, or between accounts of a single individual who acts as both the person giving the order and the recipient. At the hearing, ATP stated that, although the transfer of sums from a current account to a savings account belonging to the same account holder does not alter either the creditor or the amount of the debt, the terms and conditions relating to the debt owed to the bank will, by contrast, be altered. A transfer between two accounts belonging to the same account holder will be carried out using accounting entries, from which point new terms and conditions will apply to the debt in question.

81Such transactions, whether carried out by means of a physical transfer of funds or by means of accounting entries, are services which are covered by the exemption provided for in Article 13B(d)(3) of the Sixth Directive.

82As mentioned in paragraph 70 above, some of the services in respect of which eligibility for VAT exemption is contested in the case before the referring court, such as transactions crediting contributions paid into pension customers’ pension scheme accounts, are not of a purely technical nature but appear to establish the rights of pension customers vis-à-vis pension funds by transforming the claim held by a worker vis-à-vis his employer into a claim held by that worker vis-à-vis the pension fund of which he is a member.

83However, it is for the referring court, which has before it all the information it needs to analyse each of the transactions in question, to assess whether those services are covered by the exemption provided for in Article 13B(d)(3) of the Sixth Directive, as interpreted in the present judgment.

84It is also for that court to assess whether, pursuant to the case-law referred to in paragraph 58 above, the other services provided by ATP are so closely linked to transactions crediting contributions paid into pension customers’ pension scheme accounts that they form, objectively, a single, indivisible economic supply, which it would be artificial to split.

85In the light of the foregoing, the answer to Questions 3 and 4 is that, on a proper construction of Article 13B(d)(3) of the Sixth Directive, the VAT exemption laid down in that provision for transactions concerning payments and transfers covers services by means of which an undertaking establishes the rights of pension customers vis-à-vis pension funds through the creation of accounts for those customers within the pension scheme system and the crediting to those pension customers’ accounts of the contributions paid, and any transactions which are ancillary to those services or which combine with those services to form a single economic supply.

86In view of the answer to Questions 3 and 4, there is no need to answer Question 5.

Costs

87Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (Fifth Chamber) hereby rules:

On a proper construction of 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, pension funds such as those at issue in the main proceedings may fall within the scope of that provision if they are funded by the persons to whom the retirement benefit is to be paid, if the funds are invested using a risk-spreading principle, and if the pension customers bear the investment risk. In that regard, it is of little consequence that the contributions are paid by the employer; that the amount paid in is based on collective agreements between labour‑market organisations; that there are different ways of paying out the funds invested; that contributions are deductible under income tax law; or that it is possible to add an insurance element which is ancillary to the other services provided.

On a proper construction of Article 13B(d)(6) of Sixth Directive 77/388, the term ‘management of special investment funds’ used in that provision covers services by means of which an undertaking establishes the rights of pension customers vis-à-vis pension funds through the opening of accounts in the pension scheme system and the crediting to such accounts of the contributions paid. That term also covers accounting services and account information services such as those listed in Annex II to 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 Directives 2001/107/EC and 2001/108/EC of the European Parliament and of the Council of 21 January 2002.

On a proper construction of Article 13B(d)(3) of Sixth Directive 77/388, the value added tax exemption laid down in that provision for transactions concerning payments and transfers covers services by means of which an undertaking establishes the rights of pension customers vis-à-vis pension funds through the creation of accounts for those customers within the pension scheme system and the crediting to those pension customers’ accounts of the contributions paid, and any transactions which are ancillary to those services or which combine with those services to form a single economic supply.

Signatures

[Signatures]

( *1 ) Language of the case: Danish.

OPINION OF ADVOCATE GENERAL

CRUZ VILLALÓN

delivered on 12 December 2013 ¹

‛Value added tax — Article 13B(d)(6) of Council Directive 77/388/EEC — Exemption of the management of special investment funds — Concept of ‘special investment funds as defined by Member States’ — Occupational retirement schemes — Defined contributions retirement schemes’

1The VAT exemption for the management of special investment funds in Article 13B(d)(6) of the Sixth Directive ² has occupied the Court repeatedly. ³ The case at hand offers the Court the opportunity to refine its jurisprudence with respect to the term ‘special investment funds’, namely in the context of occupational pension funds. The case also raises questions about what constitutes ‘management’ of special investment funds and about the tax exemption for transactions concerning deposits and current accounts, payments and transfers in Article 13B(d)(3) of the Sixth Directive.

2The questions arise in a dispute between ATP PensionService A/S (‘ATP’) and the Danish Ministry of Taxation (‘Skatteministeriet’) over the value added tax (‘VAT’) treatment of ATP’s services. ATP provides services to occupational pension funds.

I – Legal framework

A – European Union law

3According to Article 2 of the Sixth Directive, the supply of services effected for consideration within the territory of the country by a taxable person acting as such is subject to VAT.

4Article 13 of the Sixth Directive contains a number of VAT exemptions. Two of these are pertinent in the case at hand, namely Article 13B(d)(3) and (6). They read as follows:

‘Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of the exemptions and of preventing any possible evasion, avoidance or abuse: …

the following transactions: …

3transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection and factoring; …

6management of special investment funds as defined by Member States.’

5Given the date of the facts of the case at hand, the Sixth Directive applies. Nevertheless it is worth mentioning that the cited provisions have been reproduced without any change that would be of relevance for the current proceedings in Articles 2(1)(c) and 135(1)(d) and (g) of Council Directive 2006/112/EC. ⁴

B – National law

6The Union law provisions mentioned are implemented by Paragraph 13(1)(11)(c) and (f) of the Danish Law on VAT (‘momsloven’). The relevant Paragraph provides:

‘The following goods and services shall be exempt from tax: …

11The following financial activities: …

Transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection and factoring; …

Management of special investment funds.’

7As the referring court points out, several of these terms have been interpreted in administrative guidelines (‘juridiske vejledning’). ⁵

II – Facts and the main proceedings

8ATP provides services to pension funds. Its most important client, PensionDanmark, is an occupational pension fund administering retirement schemes under collective agreements and enterprise agreements.

9Occupational retirement schemes are an essential element of the Danish pension system. That system relies on three pillars: a tax-financed public retirement scheme, an occupational retirement scheme and personal pension plans. ⁶

10Danish occupational retirement schemes, which, due to ATP’s activities, are at the core of this case, are generally ‘defined contributions’ schemes, provided in an occupational setting. The employers pay a defined contribution to the institution providing the retirement scheme (normally a pension fund) for each of their employees, ⁷ who may make voluntary additional contributions. ⁸ Contributions to such schemes are tax deductible under Danish income tax law within certain limits. The pension that will be paid out depends on the amount of money paid into the scheme and the success of the investment made by the pension fund (after deduction of costs). It is typically paid out in a combination of three types of (taxable) payments once the beneficiary becomes eligible for payment: a life annuity, instalment payments over a certain period and payment of a lump sum. The details of an occupational retirement scheme are determined by a collective agreement between the employers’ organisations and the trade unions representing individual employers and employees. ⁹

11While ATP is not involved in the investment of the contributions (this task is handled by the pension funds themselves) it does provide three types of services to the pension funds. First of all ATP provides services relating to system maintenance and development, namely the development and maintenance of the platform on which ATP’s services are provided. Secondly, ATP undertakes administrative tasks, such as providing information and advice both to employers and employees in relation to the retirement schemes. Thirdly, ATP provides services as to the payment into and disbursement out of the retirement schemes.

12In a simplified manner these latter services can be described as follows. The employer periodically pays the contributions it owes under the occupational pension scheme for all its employees collectively as an aggregate into the pension fund’s bank account. ATP opens individual accounts ¹⁰ for individual pension customers on the basis of information it receives from the employer. It distributes the aggregate sum the employer pays among these accounts according to the provisions of the collective agreement or enterprise agreement. The pension customer can access the account, which is updated regularly by ATP, via internet. Once payments become due, ATP initiates the withdrawal of amounts by issuing instructions to the financial institution to pay the amount due to the pension customer.

13Until 30 June 2002 ATP charged VAT on its services. In light of the judgment in SDC, ¹¹ however, ATP changed its mind and argued that its services relating to payments into and disbursements out of the pension schemes should be exempt from VAT under Article 13B(d)(3) of the Sixth Directive. It informed the Danish tax administration (‘SKAT’) of this view on 26 June 2002. The SKAT ruled that ATP’s services in connection with pension disbursements were indeed VAT exempt, but ruled against the application of the exemption as to most of the services related to inward payments, namely: the registration of employers liable to pay pension contributions, the opening of individual accounts, the provision of facilities for handling the payments from employers, so that all contributions can be paid into the pension fund’s account using an online service or payment card, receipt and registration of reports from employers on the allocation of the total amount to individual employees, crediting contributions to individual accounts and updating the accounts, recording missing payments, reporting to pension customers on contributions paid and sending out account statements. The ruling was upheld by the highest Danish administrative tax authority, the National Tax Tribunal (Landsskatteretten) by order of 13 May 2009.

14ATP challenged the ruling before the Hillerød Court (Retten i Hillerød), which in turn referred the case to the Eastern Regional Court (Østre Landsret) as being of general importance. ATP argues that the services which were considered to be subject to VAT are exempt as constituting ‘management of special investment funds’ under Paragraph 13(1)(11)(f) of the momslov, implementing Article 13B(d)(6) of the Sixth Directive and/or as a ‘transaction … concerning deposit and current accounts, payments, transfers …’ under Paragraph 13(1)(11)(c) of the momslov, implementing Article 13B(d)(3) of the Sixth Directive. The Skatteministeriet contests the claim that ATP’s services are VAT exempt.

III – Questions referred for a preliminary ruling and procedure before the Court of Justice

15After consultations with the parties and deliberation the Østre Landsret decided, by order of 8 October 2012, to refer the following questions to the Court of Justice of the European Union pursuant to Article 267 TFEU:

Is Article 13B(d)(6) of [the Sixth Directive] to be interpreted as meaning that the term “special investment funds as defined by Member States” includes pension funds such as those referred to in the main proceedings and having the following characteristics, where the Member State recognises the institutions presented in section 2 of the present order for reference as special investment funds:

the return to the employee (the pension customer) depends on the yield realised by the pension fund’s investments,

the employer is not required to make supplementary payments in order to secure a particular return for the pension customer,

the pension fund collectively invests the funds accumulated applying a risk-spreading principle,

the bulk of the payments into the pension fund is based on collective agreements between labour-market organisations representing the individual employees and employers, and not on the personal decision of the individual employee,

the individual employee may decide, on a personal basis, to make additional contributions to the pension fund,

self-employed traders, employers and directors may opt to pay pension contributions into the pension fund,

a predetermined portion of the pension savings collectively agreed for the employees is used to purchase a life annuity,

the pension customers bear the pension fund’s costs,

payments into the pension fund are deductible for the purposes of national income tax within certain quantitative limits,

payments into a personal pension plan, including a pension fund set up with a financial institution under which the contributions can be invested in a special investment fund, are deductible for the purposes of national income tax to the same extent as under point (i),

the counterpart to the entitlement to deduct contributions for tax purposes under point (i) is that disbursements are taxed, and

the funds accumulated are in principle to be paid out after the person concerned reaches pensionable age?

If the first question is answered in the affirmative, is Article 13B(d)(6) of the Sixth Directive to be interpreted as meaning that the term “management” includes a service such as that in issue in the main proceedings (see section 1.2 of the order for reference)?

Is a service such as that in issue in the main proceedings concerning pension payments (see section 1.2 of the order for reference) to be regarded under the terms of Article 13B(d)(3) of the Sixth Directive as a single service or as several separate services which are to be assessed independently?

Is Article 13B(d)(3) of the Sixth Directive to be interpreted as meaning that the VAT exemption laid down in that provision for transactions concerning payments or transfers covers a service such as that in issue in the main proceedings concerning pension payments (see section 1.2 of the order for reference)?

If the fourth question is answered in the negative, is Article 13B(d)(3) of the Sixth Directive to be interpreted as meaning that the VAT exemption laid down in that provision for transactions concerning deposit and current accounts covers a service such as that in issue in the main proceedings concerning pension payments (see section 1.2 of the order for reference)?’

16ATP, the Kingdom of Denmark and the Commission submitted written observations.

17At the hearing on 2 October 2013 these three parties and the United Kingdom of Great Britain and Northern Ireland made observations.

IV – Assessment

A – Preliminary considerations

18The referring court’s questions cover three distinct issues: the meaning of ‘special investment funds as defined by Member States’ in the context of occupational retirement schemes (first question), the notion of ‘management’ of such funds (second question), and the application of Article 13B(d)(3) of the Sixth Directive to services such as those provided by ATP (third to fifth question).

19The Court’s case-law as to all three of the issues is already rather extensive. ¹² In light of this case-law I consider the Court to dispose of sufficient elements for considering the second and third issues. I will hence focus my analysis on the first issue, i.e. the meaning of ‘special investment funds as defined by Member States’, namely the question whether (and when) an occupational pension fund, such as the one that ATP provides services to, must be considered a special investment fund. That question has been raised twice recently, in Wheels and PPG Holdings, ¹³ but both of these cases differ significantly from the one at hand.

20The question falls within the highly complex and controversial field of the VAT treatment of financial services (including pension services). These services have seen a significant diversification, ¹⁴ to which the current VAT directive, in particular the exemptions in the field of financial services, does not do justice. The consequence is a lack of legal certainty for operators in that area as well as diverging applications of the exemptions in question by Member States. ¹⁵

21The Commission has proposed both a directive to amend Directive 2006/112 regarding the treatment of insurance and financial services ¹⁶ and a regulation laying down implementing measures regarding the treatment of insurance and financial services, containing definitions of the scope of exempt services. ¹⁷ Both were the subject of extensive preparatory work, ¹⁸ in the course of which pension funds and their VAT treatment were also discussed. ¹⁹ However, no agreement has been reached on the reform. ²⁰ Nor, according to the Commission’s statements at the hearing, can we expect such an agreement to be forthcoming soon. Whatever the state of affairs with respect to a change in the applicable law may be, the Court has to decide based on the law in force at the time of the events in question.

22I will start my analysis with an overview of the arguments made by the parties to the proceedings. Afterwards I will describe the interpretation the term ‘special investment funds as defined by Member States’ has received in the case-law so far. Finally, I will analyse the consequences of the case-law for occupational pension funds.

B – Observations submitted to the Court

23Denmark takes the view that it is within the power of the Member States to define the term ‘special investment funds’ in Article 13B(d)(6) of the Sixth Directive and to exclude pension funds with the characteristics described by the referring court from their definition.

24According to Denmark, Member States have to facilitate the investment in special investment funds and respect the principle of neutrality with respect to the VAT imposed on funds in competition with special investment funds. In Denmark’s view, the funds at issue in this case differ sufficiently from special investment funds to justify a different treatment: contributions are paid by the employer, their goal is to provide a pension rather than to save money, they also provide insurance such as life assurance and insurance for incapacity to work, ²¹ in the case of the death of the beneficiary the contributions do not (or do not wholly) fall to the beneficiary’s heirs, and the contributions are generally exempt from income tax. According to Denmark, the employer who pays the contributions does not invest, but rather pays because it is obliged to do so under the collective agreement setting up the pension scheme.

25ATP considers pension funds with the characteristics described by the referring court to fall under Article 13B(d)(6) of the Sixth Directive and hence to be VAT exempt. ATP argues that even though Member States enjoy some degree of discretion in the definition of ‘special investment funds’, they have to respect the objectives of the exemption and the principle of fiscal neutrality. The purpose of the VAT exemption at issue is to enable individuals to invest their savings collectively, thereby spreading the risk, without being burdened by VAT. Those goals are, according to ATP, also pursued by the pension schemes at issue. The mere fact that pension schemes have the particular goal of financing a pension does not justify a different treatment.

26ATP regards the principle of neutrality as supporting its position, as other special investment funds are in competition with pension funds. If the contributions, taken from the employee’s regular pay, did not go to the fund, the employee would have to save the money in another way. The competitive relationship is particularly obvious with respect to supplementary contributions or contributions by individuals who are not originally covered by occupational pension schemes. The fact that part of the return of a pension fund will be paid out as a life annuity ²² is, in ATP’s opinion, irrelevant, as a life annuity can simply be bought for a lump sum. Equally irrelevant are, in ATP’s view, the facts that contributions to pension funds are tax-deductible and that the pension funds usually carry an element of insurance. Furthermore, ATP argues that the conclusion of occupational pension funds by collective agreement is irrelevant, as the employees take the relevant decisions, represented by trade unions.

27At the hearing, ATP pointed out that the pension funds at issue in the case differ significantly from those that were the subject of Wheels and PPG Holdings. Those cases concerned defined benefit schemes, in which the employer fulfilled a legal obligation by paying the pension. Only the employees could participate in the regime. In contrast, the case at hand concerns a defined contribution scheme, in which the beneficiaries and investors carry the risk. The employer merely has to pay the contribution. A larger public, namely everyone linked to the labour market, can participate in the pension schemes.

28The United Kingdom argued at the hearing that defined contribution pension funds such as the one described by the referring court are not sufficiently comparable to special investment funds to be in competition with them and hence cannot benefit from the VAT exemption at issue for five reasons: occupational pension funds cannot be sold at will, do not grant any right to the funds invested before the beneficiary reaches pension age and are lost in case of death, are agreed on by collective agreement and paid by the employer rather than constituting investments by the employee, are available to employees only rather than the public at large and finally do not fall under the regime of Council Directive 85/611/EEC (‘UCITS Directive’). ²³

29The Commission argues that the pension funds at issue fall under the notion of ‘special investment funds’. It distinguishes between defined contribution and defined benefit schemes, arguing that with respect to the former schemes employees benefit from their investment and are hence in a similar situation to small investors with respect to special investment funds. ²⁴

C – Case-law on ‘special investment funds as defined by Member States’

30The case-law on Article 13 of the Sixth Directive contains both relevant general statements as to the interpretation of exemptions and important considerations relating to the interpretation of the term ‘special investment funds as defined by Member States’. I will cover these two issues in turn and then present my own considerations on the approach of the Court when analysing Article 13B(d)(6) of the Sixth Directive.

1. General considerations as to the interpretation of VAT exemptions

31When interpreting the exemptions contained in Article 13 of the Sixth Directive the Court has consistently held that as a rule the terms of these exemptions have their own autonomous meaning in Union law, as their ‘purpose is to avoid divergences in the application of the VAT system from one Member State to another’. ²⁵ This, however, is not the case with respect to terms the definition of which Union law explicitly entrusts to Member States. ²⁶ In such cases it is for the Member States to define the concept in question in their domestic law. ²⁷ When defining such concepts, however, they may not ‘prejudice the objectives pursued by the Sixth Directive or the general principles underlying it, in particular the principle of fiscal neutrality’. ²⁸

32Furthermore, the Court has consistently held that the exemptions contained in Article 13 of the Sixth Directive must be interpreted strictly, as in principle VAT is to be levied on all services supplied for consideration by a taxable person. ²⁹

2. The term ’‘pecial investment funds as defined by Member States’

33As the wording of the term suggests, Union law leaves the definition of ‘special investment funds’ to Member States. I will discuss the meaning of this discretion of Member States first, and then summarise the Court’s case-law as to three limits of the discretion: the wording of the provision and the UCITS Directive, the purpose of the exemption, and the principle of fiscal neutrality.

a) Discretion of Member States

34As I already mentioned, the principle that the terms of exemptions under Article 13 of the Sixth Directive must be interpreted autonomously finds its limits where the definition is explicitly left to Member States. The Court has held that this is the case with respect to the term ‘special investment funds’. ³⁰ However, States can hardly be free to define anything under the sun as ‘special investment funds’. Such unfettered discretion would come with the risk of abuse, would confound the different exemptions and would run counter to the principle that the exemptions are generally read narrowly. There hence must be some Union meaning of the term ‘special investment funds’ despite the exemption’s wording leaving the definition to Member States.

35The tension in Union law both leaving the definition of a term to Member States and nevertheless having to impose limits on that definition ³¹ is apparent in the following statement of the Court: ‘the task of defining the meaning of the words “special investment funds” does not in any way permit the Member States to select certain funds located on their territory and grant them exemption and exclude other funds from the exemptions. … [T]he terms “special investment funds” must be the starting point for the discretion conferred on the Member States’. ³² What the Court meant to say is that logically, Union law has to fix both an inner and an outer frame of the concept ‘special investment funds’ within which Member States are free to choose their definition of the term. The discretion of Member States to determine the content of the concept is thus limited. The Court derives these limits from the wording (and later legislative developments) of the provision, its purpose and general principles underlying the directive such as the principle of neutrality. ³³

36In practice, the application of these limits has reduced the definitional power of Member States significantly. This development could be criticised, but legal security, which is of the essence when it comes to the VAT treatment of financial products, requires respect for the continuity of the case-law of the Court.

b) The wording of the provision and the UCITS Directive

37The wording of Article 13B(d)(6) of the Sixth Directive gives comparatively little guidance as to the content of the term ‘special investment funds’, particularly when bearing in mind the various terms used in different languages. Thus, where the English version of the Sixth Directive speaks of ‘special investment funds’, the French one refers to ‘fonds communs de placement’, the Spanish one to ‘fondos communes de inversión’, ³⁴ the German one to ‘Sondervermögen’, and the Dutch one to ‘gemeenschappelijke beleggingsfondsen’.

38However, later developments have fleshed out this term. In 1985 the UCITS Directive entered into force to coordinate national laws governing collective investment undertakings. The precise relationship between that directive and Article 13B(d)(6) of the Sixth Directive is not immediately apparent. As the Court stated, the Spanish, French, Italian and Portuguese versions of the directive’s term for undertakings for collective investment in transferable securities (‘UCITS’) constituted under the law of contract use the same expression as that which appears in the exemption, but that is not the case for other languages such as English, German and Danish. ³⁵

39The Court and its Advocate Generals have, accordingly, struggled do define the relationship between the UCITS Directive and Article 13B(d)(6). ³⁶ However, in Wheels the Court clearly held that ‘[f]unds which constitute undertakings for collective investment in transferable securities within the meaning of the UCITS Directive are special investment funds’. ³⁷ They hence constitute a minimum content of the term ‘special investment funds’.

c) The purpose of the exemption

40As Advocate General Kokott pointed out in her Opinion in Abbey National, the purpose of the exemption is to ‘facilitate investment in common funds for small investors’. ³⁸ Such funds are supposed to pool the money of several investors, ³⁹ to enable them to spread the risk over a range of securities. The VAT exemption allows these investors to engage in such investments without incurring the additional cost of VAT. ⁴⁰ The Court has embraced this purpose. ⁴¹

41Consequently, the Court has held that the exemption covers special investment funds ‘whatever their legal form’. ⁴² Whether such funds are constituted under contract or trust law or under statute is irrelevant for their pursuit of the described purpose. The Court pointed out that a different interpretation would run counter to the principle of fiscal neutrality, which prevents the different treatment of economic operators carrying out the same transactions. ⁴³

42Similarly, the Court held that the mode of operation used by the fund is irrelevant: whether a fund is ‘open-ended’ (i.e. a variable capital fund that is obliged to buy back its units from investors wishing to sell) or ‘closed-ended’ (i.e. fixed-capital, whose shares can only be sold on a secondary market) does not play a role for the fund’s classification with respect to the VAT exemption under Article 13B(d)(6) of the Sixth Directive. Again, this holding can also be based on the principle of fiscal neutrality. ⁴⁴

d) The principle of fiscal neutrality

43The principle of fiscal neutrality, according to the Court, ‘precludes economic operators carrying out the same transactions from being treated differently in relation to the levying of VAT’. Goods or services that are in competition with each other due to their similarity cannot be treated differently with respect to VAT. ⁴⁵

44The criterion of a competitive relationship is a difficult one. Advocate General Sharpston commented on its dangers in Deutsche Bank, remarking that there always is some overlap between activities and if all activities ‘partly in competition with each other had to receive the same VAT treatment, the final result would be’ the elimination of all differences in VAT treatment. ⁴⁶

45The danger perceived by Advocate General Sharpston can be eliminated by applying a correct methodology of comparison. First of all a comparator needs to be established that falls under the concept ‘special investment fund’. The fund at issue will only be compared to that comparator. According to what I have stated above, funds which are collective investment undertakings within the meaning of the UCITS Directive fall under the concept of ‘special investment fund’ and hence can serve as a comparator. ⁴⁷

46Whether the fund analysed must also be included in the concept of ‘special investment fund’ or not is a question of whether that fund and the comparator are sufficiently comparable for them to be in competition with each other. ⁴⁸ The criteria of the funds that are to be compared to establish sufficient likeness for there to be competition are not chosen randomly. Neither is the analysis an entirely economic one. Rather, it has to be based on the objective of the exemption. Relevant criteria are thus, for example, whether the fund is a method of spreading risk, whether the investors benefit from the gains in the investment etc.

3. Considerations on the approach of the Court

47According to the case-law of the Court, the discretion of Member States to determine the term ‘special investment funds’ is thus limited by the objective of the exemption, the UCITS Directive and the principle of neutrality. A closer look reveals that, arguably, the Court has applied these (overlapping ⁴⁹) limits in such a manner that they compose two alternative tests.

48At times the Court refers to the objectives of the exemption, deriving what amounts to a definition of the term ‘special investment funds’, using the principle of neutrality to confirm the outcome. ⁵⁰ On other occasions the Court regarded UCITS as the core of ‘special investment funds’ and then applied the principle of neutrality. ⁵¹

49I propose to use (and further refine) the second of these approaches. A fund hence has to be considered as a ‘special pension fund’ if it either falls under the UCITS Directive or is sufficiently comparable to UCITS for them to be in competition with each other. Relevant characteristics for the comparison are those relevant to the objectives of the exemption analysed, which is to allow several investors to pool their funds and thus spread the risk over a range of securities.

D – Occupational pension funds as special investment funds

50After these considerations I will now apply the described principles to the case at hand. The question that is posed by the current case is to what extent occupational pension funds have to be considered special investment funds. Union law contains some rules on such funds, but does not harmonise them. ⁵² According to what I have stated above I will have to analyse whether the funds at issue are UCITS and, if not, to what extent the principle of fiscal neutrality demands their inclusion in the exemption.

1. UCITS Directive

51Occupational pension funds such as those in question in this case do not fall under the UCITS Directive. ⁵³ As Denmark has pointed out, the units of the funds at issue in this case cannot, at the request of holders, be re-purchased or redeemed as is the case for UCITS according to Article 1(2) of the UCITS Directive.

2. Principle of fiscal neutrality

52In a second step, the principle of fiscal neutrality has to be applied. It asks whether the funds at issue are sufficiently comparable to UCITS for them to be in competition with them. ⁵⁴ In Wheels the Court had to consider that question for other types of occupational pension funds. It held those funds not to fall under Article 13B(d)(6) of the Sixth Directive. Those funds pooled the assets of a retirement pension scheme and were not open to the public, but merely granted employment-related benefits. Significantly, they were of the ‘defined-benefit’ type, i.e. the members of the scheme did not bear the risk arising from the management of the fund, as the amount of their pension was fixed and thus did not depend on the success of the investment. According to the Court, the fund was also not a special investment fund from the employer’s point of view, as for it the contributions were a means by which it complied with its legal obligations. Advocate General Sharpston followed this reasoning in PPG Holdings, identifying three relevant criteria: whether the scheme pools the assets of a retirement pension scheme, whether members of the pension scheme bear the risk arising from the management of the fund, and whether the employer makes the contributions to comply with its legal obligations towards its employees. ⁵⁵

53Without challenging the outcome of those cases I propose to refine the analysis for the case at hand. Under Union law certain criteria are relevant and others irrelevant for comparing funds with UCITS to determine whether they are sufficiently comparable to be in competition with them. It is incumbent upon the national courts to analyse the relevant facts, apply those criteria and decide whether the pension fund at issue in a case must be considered a ‘special investment fund’.

a) Point of view of comparison

54Before I can list irrelevant and relevant criteria I have to point out that pension schemes can be analysed as asset-pooling instruments of employers or of employees. Which of these two paradigms applies depends on whether the employees or the employers benefit from the investment. According to the description of the referring court, the employees benefit from the fund in the case at hand.

b) Irrelevant criteria

55As the analysis of the comparable character of the funds at issue with UCITS has to be undertaken with the objective of the exemption in mind, a number of elements that have been discussed in this case are irrelevant to the comparison.

56This is, contrary to the allegations of Denmark, true with respect to the purpose of the investment. Whether the investor saves for pensions or for other purposes has no relevant impact on the competitive relationship. Hence the fact that the funds at issue are pension funds does not prevent them from constituting ‘special investment funds’. In contrast to Wheels, I would consequently dismiss the relevance of the employer’s legal obligation with respect to paying defined pension benefits as an irrelevant ‘purpose’ of the investment.

57The fact that occupational pension funds are not agreed on individually but collectively is irrelevant. First of all, the employees’ representatives negotiate the characteristics of the funds with the employers’ representatives. Even though a collective agreement might mean that there is very little economic competition between the funds and UCITS outside of voluntary supplementary payments by the employees, this is not relevant to the objective of the exemption. In this respect the Court has already decided that the exemption covers funds whatever their legal form. To that extent the possibility of making supplementary payments or the voluntary adherence of some persons to occupational funds is equally irrelevant.

58The same consideration applies to the question whether the contributions to a fund are income tax deductible or not. A favourable income tax treatment for contributions to some funds over others might have a considerable impact on the economic competitive relationship, but it has no significance with respect to the objectives of the exemption and hence must be disregarded.

59Similarly, the mode of payments out of the retirement fund (life annuity or lump sum) is not significant for the fund’s characterization, as transfers between the various options are possible by a simple financial transaction.

60Where occupational pension funds are bundled with an insurance element and the two elements cannot be separated, as is the case here, the national Courts have to determine which element is prevalent.

c) Relevant criteria

61As I have stated above, the criteria relevant for the comparison have to be deduced from the purpose of the exemption, namely to allow the pooling of funds of several investors, and to spread the risk over a range of securities.

62According to this premise, only a limited number of elements are essential for comparing occupational pension funds to UCITS for the purposes of fiscal neutrality under the exemption analysed. First of all, several beneficiaries have to pool their funds to spread the risk over a range of securities. The fund can only be considered a pooling of the beneficiaries’ funds if the beneficiaries enjoy an unconditional legal right with respect to their investment. They may not be able to realise the right at will (i.e. sell their entitlement) and they may receive the benefit of their investment only upon retirement. However, where the investment is lost in case of death and does not fall to the heirs of the beneficiary, one can hardly speak of a pooling of the beneficiaries’ funds.

63Finally, the beneficiaries have to bear both the cost of the fund and the risks of the investment, even though the contributions can be paid by their employer as part of their payment package. This will generally be the case with respect to defined-contribution, but not with respect to defined-benefit schemes. As I have already stated, the application of these criteria is incumbent on the national courts.

64I therefore conclude that Article 13B(d)(6) of the Sixth Council Directive has to be interpreted as meaning that the term ‘special investment funds as defined by Member States’ has to include occupational pension funds where such funds pool the assets of several beneficiaries, and allow the spreading of the risk over a range of securities. This is only the case where the beneficiaries bear the risk of the investment. The fact that the contributions are made by their employers for their benefit under a collective agreement between organisations representing employees and employers and that payments out of the fund are only made upon retirement is irrelevant, as long as the beneficiary has a secure legal position with respect to her or his assets. Whether a fund fulfils these requirements is for the national courts to decide.

V – Conclusion

Conclusion

65In the light of the foregoing, I suggest that the Court should answer the first question raised by the Østre Landsret as follows:

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 has to be interpreted as meaning that the term ‘special investment funds as defined by Member States’ has to include occupational pension funds where such funds pool the assets of several beneficiaries, and allow the spreading of the risk over a range of securities. This is only the case where the beneficiaries bear the risk of the investment. The fact that the contributions are made by their employers for their benefit under a collective agreement between organisations representing employees and employers and that payments out of the fund are only made upon retirement is irrelevant, as long as the beneficiary has a secure legal position with respect to her or his assets. Whether a fund fulfils these requirements is for the national courts to decide.

¹ Original language: English.

² 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 (‘Sixth Directive’) as amended, OJ 1977 L 145, p. 1.

³ Case C-169/04 Abbey National [2006] ECR I-4027; Case C-363/05 JP Morgan Fleming Claverhouse Investment Trust and The Association of Investment Trust Companies (‘JP Morgan’) [2007] ECR I-5517; C‑44/11 Deutsche Bank [2012] ECR; Case C‑275/11 GfBk [2013] ECR; Case C‑424/11 Wheels Common Investment Fund Trustees and Others (‘Wheels’) [2013] ECR; Opinion of Advocate General Sharpston in Case C-26/12 PPG Holdings, pending.

⁴ Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1), as amended.

⁵ The VAT exemption for transactions concerning deposit or current accounts is interpreted in D.A.5.11.6. Special investment funds are described in D.A.5.11.9.2. Their management is the subject of D.A.5.11.9.3.

⁶ For an overview of common pension schemes see OECD, Pensions at a Glance, 2005; updated in OECD, Pensions at a Glance, 2011.

⁷ Persons not covered by virtue of their employment situation, such as self-employed traders, employers and directors, may opt to pay into an occupational pension scheme if such a scheme has been agreed on for the employees of the undertaking in question.

⁸ In practice these constitute the significantly smaller part of the funds, as stated by ATP at the hearing.

⁹ Personal pension schemes follow a largely similar pattern, but it is the beneficiaries themselves who contract to have such a scheme and pay for it.

¹⁰ These accounts are pension accounts rather than separate bank accounts.

¹¹ Case C-2/95 [1997] ECR I-3017.

¹² As to the first two issues see the case-law cited in footnote three. As to the third issue see SDC; Case C-305/01 MKG-Kraftfahrzeuge-Factoring [2003] ECR I-6729; order of 14 May 2008 in Joined Cases C‑231/07 and C‑232/07 Tiercé Ladbroke; Case C-242/08 Swiss Re Germany Holding [2009] ECR I-10099; Case C-175/09 Axa UK [2010] ECR I-10701; Case C-350/10 Nordea Pankki Suomi [2011] ECR I-7359; Opinion of Advocate General Kokott in Case C‑461/12 Granton Advertising, pending. I discuss the second issue in my Opinion in Case C‑275/11 GfBk, pending.

¹³ Opinion of Advocate General Sharpston.

¹⁴ The Commission is of the view that the number of insurance and financial products available on the market exceeds 5000. Directorate General Taxation and Customs Union, Harmonisation of Turnover Taxes, 5 March 2008, TAXUD/2414/08, p. 3.

¹⁵ The difference in the VAT treatment of financial services is readily apparent in a report prepared by PricewaterhouseCoopers for the European Commission: Study to Increase the Understanding of the Economic Effects of the VAT Exemption for Financial and Insurance Services, 2 November 2006. An overview over the implementation of the exemptions in Member States’ national laws can be found in the Annex to IBFD, VAT Survey Financial Services, 2006. See also Comment by Wessels, J., Highlights & Insights on European Taxation, 2012 No 4, p. 62.

¹⁶ COM(2007) 747 final/2 of 20 February 2008.

¹⁷ COM(2007) 746 final/2 of 20 February 2008.

¹⁸ See Directorate General Taxation and Customs Union, supra, footnote 14.

¹⁹ See Note from the Presidency, Proposals for a Council Directive and Regulation as regards the VAT treatment of insurance and financial services, Doc. 13577/10 FISC 92 of 16 September 2010, p. 20. The document has been referred to by ATP to support its position that pension funds are deemed to be covered by the term special investment fund.

²⁰ From the published documents it is apparent that disagreement also continues in the question of the treatment of pension funds. Item Note from the General Secretariat, Proposals for a Council Directive and Regulation as regards the VAT treatment of insurance and financial services, Doc. 18650/11 FISC 170 of 14 December 2011, p. 5. The need for finalising the reform is stressed by Dahm, J., and Hamacher, R., Vermögensverwaltung und Umsatzsteuer, UR 2012, 817.

²¹ At the hearing Denmark stated that it treats funds such as the one at issue as insurance companies.

²² The Skatteministeriet regarded this as an important difference of pension funds when compared to special investment funds.

²³ 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) (OJ 1985 L 375, p. 3) as amended. The UCITS Directive was replaced by Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ 2009 L 302, p. 32) on 1 July 2011.

²⁴ The Commission regards the characteristics (a), (b), (c) and (h) of the first question as particularly relevant for the comparison with special investment funds.

²⁵ JP Morgan, paragraph 19; Wheels, paragraph 16; Abbey National, paragraph 38; Case C-498/03 Kingscrest Associates and Montecello [2005] ECR I-4427, paragraph 22; Case C-428/02 Fonden Marselisborg Lystbådehavn [2005] ECR I-1527, paragraph 2; Case C-358/97 Commission v Ireland [2000] ECR I-6301, paragraph 51.

²⁶ JP Morgan, paragraph 20; Abbey National, paragraph 39, Wheels, paragraph 16; Case C-468/93 Gemeente Emmen [1996] ECR I-1721, paragraph 25.

²⁷ JP Morgan, paragraph 21; Joined Cases C-443/04 and C-444/04 Solleveld and van den Hout-van Eijnsbergen [2006] ECR I-3617, paragraph 29.

²⁸ JP Morgan, paragraph 22; See also Gemeente Emmen, paragraph 25; Case C-246/04 Turn- und Sportunion Waldburg [2006] ECR I-589, paragraph 31.

²⁹ Abbey National, paragraph 60; Joined Cases C-394/04 and C-395/04 Ygeia [2005] ECR I-10373, paragraph 15; Case C-45/01 Dornier [2003] ECR I-12911, paragraph 42; Case 348/87 Stichting Uitvoering Financiële Acties [1989] ECR 1737, paragraph 13.

³⁰ Abbey National, paragraph 41.

³¹ Rossi, P., L’Avvocato generale della Corte UE – Chiarita la portata dell’esenzione Iva per le operazioni di gestione dei fondi comuni di investimento, il fisco n. 38/2005, 14422.

³² JP Morgan, paragraph 41.

³³ JP Morgan, paragraphs 45 and 46; Wheels, paragraph 18; Opinion of Advocate General Kokott in JP Morgan, points 15 and 17.

³⁴ The Italian and Portuguese versions similarly refer to ‘fondi comuni d’investimento’ and ‘fundos comuns de investimento’.

³⁵ JP Morgan, paragraph 33; Abbey National, paragraph 55

³⁶ Abbey National, paragraphs 55, 61, 64 to 65; Opinion in Abbey National, points 38, 41 to 43, 50, 73 to 83; JP Morgan, paragraphs 31 to 34; Opinion in JP Morgan, points 32 and 33; Deutsche Bank, paragraph 32; Opinion in Deutsche Bank, point 74.

³⁷ Wheels, paragraph 23.

³⁸ Opinion in Abbey National, point 68.

³⁹ The reference to small investors, present in Abbey National, was dropped in the later judgment in JP Morgan, paragraph 45, as Advocate General Sharpston notes in her Opinion in Deutsche Bank, footnote 21.

⁴⁰ Opinion in Abbey National, points 27 to 29. The Court refers to this latter consideration again as ‘fiscal neutrality’. Abbey National, paragraph 62; Wheels, paragraph 19.

⁴¹ Abbey National, paragraph 62; JP Morgan, paragraph 45; Deutsche Bank, paragraph 33. See Wheels, paragraph 23.

⁴² Abbey National, paragraph 53; JP Morgan, paragraph 26

⁴³ Ibid., para. 56.

⁴⁴ JP Morgan, paragraphs 28 to 30, 35.

⁴⁵ Wheels, paragraphs 20 and 21; JP Morgan, paragraph 46; Case C-106/05 L.u.P. [2006] ECR I-5123, paragraph 32; Joined Cases C-453/02 and C-462/02 Linneweber and Akritidis [2005] ECR I-1131, paragraph 24; Case C-382/02 Cimber Air [2004] ECR I-8379, paragraph 24; Case C-109/02 Commission v Germany [2003] ECR I-12691, paragraph 20.

⁴⁶ Opinion in Deutsche Bank, point 60

⁴⁷ Wheels, paragraph 24.

⁴⁸ See JP Morgan, paragraphs 50 and 51

⁴⁹ Jaster, E., and Murchner, I., Die umsatzsteuerliche Behandlung von Vermögensverwaltungsleistungen (Teil 2), UStB 2013, 54 observe that the criteria developed in JP Morgan and those of the UCITS Directive are similar.

⁵⁰ This is my reading of Abbey National and JP Morgan.

⁵¹ The clearest application of this approach can be found in Wheels. Arguably it was pioneered in Deutsche Bank.

⁵² On 23 September 2003, Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities and supervision of institutions for occupational retirement provisions (OJ 2003 L 235, p. 10) entered into force.

⁵³ The same was true in Wheels, paragraph 25. Note that Directive 2003/41 does not apply to UCITS according to its Article 2(2)(b).

⁵⁴ Wheels, paragraphs 24 and 26.

⁵⁵ Opinion in PPG Holdings, points 16 and 17.