Sub-Participations Are VAT Exempt Under EU Law

The Court of Justice of the European Union (the “CJEU”) held on 6 October 2022 in O. Fundusz lnwestycyjny zamknięty reprezentowany przez O S.A. (Case C-250/21) (the “O Fundusz case”) that the supply of services provided by a sub-participant under a sub-participation agreement falls within the “granting of credit” exemption under Article 135(1)(b) of the VAT Directive. This departs from the Advocate-General's opinion (the “AG Opinion”), which we have written about previously  here.

LMA-style funded sub-participation

The sub-participation agreement in the O Fundusz case aligns with the arrangement under the standard form LMA funded sub-participation documentation.

The facts underlying this decision are the same as those underlying the AG Opinion. As a refresher, we have summarised the facts below.