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ARTICLE · 31 JULY 2013

PPG CJEU ruling of July 18th 2013 (C26/12)

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The Court of Justice of the European Union has recently ruled that a company establishing a pension scheme as a separate legal entity may deduct the VAT it has incurred on services relating to the management and operation of the pension fund pursuant to article 17 of Directive 77/388/EEC.

LuxembourgTax
Bonn Steichen & Partners
Bonn Steichen & Partners

On July 18th 2013, the Court of Justice of the European Union (the "CJEU") ruled that a company establishing a pension scheme as a separate legal entity may deduct the VAT it has incurred on services relating to the management and operation of the pension fund pursuant to article 17 of Directive 77/388/EEC (the "Sixth VAT Directive").

In the case at hand, pursuant to a statutory obligation, a group of companies forming a unity for VAT purposes ("PPG") set up a pension scheme for their employees and former employees in the form of a pension fund into which the companies paid contributions.

As required by law, the fund was established as a separate entity for legal and fiscal purposes. One of PPG's subsidiaries contracted with various service providers for the administration and management of the fund. The costs related to these services were not recharged to the fund and the input VAT was deducted by PPG.

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