No one was surprised last week when the European Court of Justice ruled to validate tax exemptions in Ireland. All the same, the industry welcomed this much needed clarification in the EU's disjointed tax environment, sources said.

The ruling was made in a case that involved Abbey National and the U.K. government. The case centered on the power of EU member states - in this case Ireland - to define what activities comprise management of special investment funds and on whether the services of trustees and third party administrative managers should be exempt from VAT. Ireland, Luxembourg and France treat fund administrative services as tax exempt but other EU jurisdictions, including the U.K., don't.

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