Permian | Extended VAT-exemption for fund management
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Extended VAT-exemption for fund management

For a long time, The Swedish Tax Agency (STA) held that only management fees payable by UCITS and special funds (non-UCITS regulated in LAIF) were exempt from VAT. This somewhat strict interpretation has now seemingly come to an end, as STA has had to adapt the law-application to the development in EU legislation. What is the new understanding of the VAT exemption rule and what does it mean for Swedish fund managers?

Extension of the VAT-exemption

STA recently published two position papers, painting a brighter picture for Swedish fund managers: an extension of the VAT-exemption in the Swedish VAT Act chapter 3, § 9 (VAT-exemption for financial services).

Investment funds – including AIFs and EuVECAs?
The position papers describe a new understanding of what is to be seen as an “investment fund” and what is to be seen as “management services” when applying the VAT exemption rule. Until recently, STA held that only fees for management services provided to UCITS- and special funds were VAT exempt. They have now revised their position and states that also management of other funds will be considered VAT exempt (regardless of the legal form of the fund entity), if the following four requirements are met:

  1. The fund collects capital from several investors;
  2. The fund’s owners hold the risks of the investments of the fund;
  3. The fund applies a principle of risk diversification; and
  4. The fund is subject to specific governmental supervision.

Clearly, all criteria are met by alternative investment funds regulated under LAIF. They could be buy-out funds, hedge funds, real estate funds or follow any other strategy.

EuVECA-funds meet criteria 1-3, but managers are required to register pursuant to LAIF and are subject to supervision by the FSA, albeit lighter than a fully regulated fund. It seems reasonable to assume that management of EuVECA funds will fall within scope of the VAT-exemption.

Management services for investment funds – how broad is the exemption-scope?
STA holds that the VAT exemption applies regardless of the provider of the management services. Hence, the exemption also applies when a fund manager chooses to source services that could be said to form part of the portfolio management from a third party. Accounting and fund administration services are typically included, other such services could be risk management and compliance.

Improved landscape for Swedish AIF- and EuVECA-managers
The position papers entail that Swedish AIF- and EuVECA-managers no longer need to emphasise VAT when choosing whether or not to manage a fund internally, i.e. managers employed by the fund or externally, i.e. separate management company. Such managers should analyse their existing fund structures in order to assess their VAT-effectiveness.


Link to STA’s position paper of April 21 2017 – “Undantaget från skatteplikt för förvaltning av särskilda investeringsfonder, mervärdesskatt” here.


Link to STA’s position paper of April 21 2017 – ”Särskilda investeirngsfonder, mervärdesskatt” here.


In case you have a need for examining the opportunities within the new position papers in detail, do not hesitate to contact Espen Iversen Størseth at

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