Deutsche Bank AG – Advocate General’s opinion: portfolio management services constitute a single composite supply

Wednesday, May 16, 2012

by Nick Ryan

The Advocate General has provided their opinion with regard to the discretionary fund management services as provided by Deutsche Bank AG to its individual customers. The AG’s opinion is that, although this service comprises of various elements which can be separately identifiable and are capable of being supplied separately, the fund service has to be considered to be a single supply for VAT purposes largely as these services are supplied for a single all encompassing fee and that the customer’s interest lies in benefitting from a single supply as opposed to receiving a multitude of component services. In the AG’s view this fund management service qualifies as a single supply of portfolio management.

This opinion is based on the position that the customer’s primary concern is that the investment they have being managed by Deutsche Bank AG is being managed in accordance with the agreed strategy. What securities are bought or sold, and when they are bought and sold, to meet this strategy are of less importance to them. Therefore it is the management of the fund that provides for the key element and results in this service being treated as a composite supply as opposed to a multiple supply.

It is an interesting decision and one that could well impact on other businesses who provide goods and/or services together. The position in Ireland and the UK on what constitutes a composite supply or a multiple supply is a particularly grey area for some industries and this AG opinion could provide for some keen arguments where by arguing a composite supply either reduces the VAT rate applicable or removes the supply from the VAT net.

Watch this space!

Should you require more information on this, or if you have a particular VAT question, then please contact Nick Ryan at the VAT Practice. Alternatively leave you comment below.

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