The European Union Court of Justice has ruled that, if a payment to pension fund participants depends primarily on the investment result, no value-added tax (VAT) on management is due from Dutch pension funds.

A number of pension funds and their administrators submitted questions via the Dutch District Court as part of the case, to clarify who bears the risk of investments of pension funds, with the funds suggesting that they do not have to pay VAT as the participants bear the investment risk.

This criterion is one of the four criteria that divides Dutch pension funds and the tax authorities.

However, it will now be for the Dutch court to assess whether the pension funds in question meet the criteria outlined in the ruling.

Indeed, in its response to the ruling, the Dutch Pension Federation argued that further study of the ruling will require further study and a "concrete" assessment per pension fund, particularly given new elements in the ruling.

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