Italy Tax Agency Clarifies VAT Treatment of Alternative Investment Funds

The Italian Revenue Agency Dec. 29 posted online Letter No. 628, clarifying the VAT treatment of advisory services a nonresident provided to its parent, a manager of closed-end alternative investment funds (AIFs). The AIF manager inquired as to whether the advisory services were exempt from VAT as the “management of mutual funds.” The tax agency clarified that: 1) the EU Court of Justice holds that the exemption regime can apply if the services the third party provides form a separate set, assessed as a whole, that effectively fulfils specific functions, and management of a common fund; and 2) the AIF ...