Fund management services in the focus of Transfer Pricing

In this article published in the Revue de Droit Fiscal (2021/13, Legitech), the author Oliver R. Hoor, Tax Partner, Atoz Tax Advisers, explains that all funds have in common that they are managed in one way or another by an investment manager. However, the organisation of fund management services may vary significantly from one case to another and involve two or more related parties (management companies, advisory companies, etc.). When fund management services involve controlled transactions between related parties, it is crucial that the parties to these transactions are remunerated at arm’s length. Given that the overall amount of fees for fund management services typically ranges between 1% and 2% of the assets under management (or commitments as the case may be), fund management services are frequently material transactions. Therefore, it is not surprising that the transfer pricing of fund management services is increasingly more in the focus of the Luxembourg tax authorities.

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