DFMs not exempt from VAT, says European Court

The European Court of Justice (ECJ) has said discretionary portfolio management should not be exempt from VAT.

An Advocate General (AG), giving an opinion today on a case involving Deutsche Bank, said portfolio management should be liable for VAT - rejecting the German bank's argument that such services should be exempt. The AG concluded portfolio management services constitute a single supply chain for VAT purposes. However, she understood the "logic" of Deutsche Bank which argued that, because management of joint funds and direct investment are not subject to VAT, portfolio management should also be exempt. The bank said a difference in VAT treatment could lead investors to choose the ser...