NETHERLANDS - Revelations suggesting the Dutch government could immediately abolish value-added tax (VAT) on asset management services sought by pension funds are simply not true, according to PricewaterhouseCoopers (PwC).

In a letter to its pension fund clients, PwC refers to a press release from the Dutch ministry of finance from last week, saying: "According to the ministry, in the proposed new European VAT Directive, the VAT-treatment of asset managers for pension funds is still unclear. The decision making about the topic could take months/years."

Milo Hartendorf, a senior tax manager with PwC in Amsterdam also told IPE: "The Dutch government subscribes to the idea there should be a level-playing field in the Netherlands and the Directive contributes to that, but this definitely doesn't meant that VAT will be abolished right now."

Nonetheless, from its own research for the Dutch tax office, PwC concludes a VAT exemption over asset management for pension funds could be implemented straight away.

"We have concluded that regardless of the proposed directive, on the basis of current regulation, there is already enough space for the VAT exemption," said Hartendorf.

The PwC report also found half of the EU member states have already given such an exemption, so the Netherlands would not do something out of the ordinary if they would chose to implement the exemption now.
 
Lastly, the budgetary consequences to The Netherlands would be far less dramatic than previously estimated.

"In the past, an amount of €400m was mentioned as the costs if the government did grant exemption; we have adjusted this, though using our own estimates, to €100m," concluded Hartendorf.

Many tax experts and also the newly-established Holland Financial Centre (HFC) are campaigning for such a tax exemption, to increase the competitiveness of the Dutch market as a centre of excellence for pension funds.

Robin Fransman, director of HFC, told IPE last week: "The cabinet should abolish VAT on financial services immediately. (See earlier article: Dutch government ‘positive' towards VAT exemption)

He agrees with PwC, however, it could take years before the directive comes into force.

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com

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