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The Maltese VAT Department has published guidelines on the VAT treatment of management services supplied to investment and retirement schemes and funds. VAT Directive 2006/112/EC (the 'Sixth VAT Directive') contains a mandatory exemption from VAT on the management of special investment schemes as defined by Member States. Maltese VAT legislation provides for an exemption (without credit / input VAT recovery) in respect of services consisting in “management of any investment scheme provided that these services are limited to those activities that are specific to and essential for the core activity of the scheme.” Investment schemes include ‘collective investment schemes’ and ‘retirement schemes’ as defined under Maltese law.
Services are exempt where they consist in the management of a scheme/fund (this includes administration services) as long as such services are limited to activities that are specific to and essential for the core activity of the scheme/fund. The above terms have given rise to different interpretations and therefore, the Guidelines have attempted to clarify the application and scope of the exemption.
A) Exempt Services
1) Services consisting in Management of Any Investment Scheme / Fund
The term “management” includes administration of the fund as well as services related to investment selection. Custodian services are also deemed to fall under the exemption when rendered for the investment scheme/fund.
Where a fund appoints individuals (whether as freelancers or whether sourced by other entities) to hold the post of a director, money laundering reporting officer or compliance officer, the service provided by such individual is treated as the “holding of an office” for VAT purposes and similar to the service supplied by an employee. Accordingly, such services falls outside the scope of VAT.
2) Activities that are specific to and essential for the core activity of the scheme / fund
Besides the core activity of the “management” of the fund, ancillary administrative functions may also be considered to form part of the “management” activity provided that these are specific to and essential for the purpose of the core activity which is the management of the fund itself. Such activities include but are not limited to:
- Preparation of the Net Asset Value
- Reconciliation
- Pricing the Investment Portfolio
- Payment of Bills
- Preparation of Financial Statements
- Fund Accounting
- Performance Reporting
- Compliance Reporting
- Preparation of Contract Notes
- Market Research
- Retailing
- Liaising with the Malta Financial Services Authority
- Updating the media and the stock exchange with the fund prices
The above also applies to outsourced activities.
B) Non-Exempt services
Services that are not considered to be specific to and essential for the core activity are not exempt. Services which are for the direct needs of the fund manager or administrator include but are not limited to:
- Management Accounts of the Fund Management Company
- Annual Financial Accounts
- Payroll services
- Serviced office space
For further information or clarifications, please contact This e-mail address is being protected from spambots. You need JavaScript enabled to view it or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .