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As the second largest fund centre in the world, Luxembourg keeps a close eye on any tax development in relation to the investment fund sector. One of the key trend in taxation in the current environment is VAT. The investment fund sector is one of the last to be spared by VAT since the European VAT legislation includes a specific VAT exemption applicable to the “management of special investment funds”. The purpose of this VAT exemption is to treat the management of special investment funds similarly to the investment decisions private individuals could make on their own with respect to their portfolios. In essence, since small investors do not always have the required understanding of financial markets to make sound investments, receiving assistance from qualified people for the...
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