Is VAT charged on management fees charged within a group?

Answered by FinTaxIQ - TI from the Federal Tax Authority’s own law · 11 October 2026. Guidance, not tax advice: rely on the official text.

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It depends on whether the companies are registered together as one VAT Group. If they are, fees between them are usually ignored for VAT; if not, the management fee is charged VAT at 5%.

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The detail

Management fees are generally a standard-rated supply of services. However, where the companies form a VAT Group (treated as a single taxable person under the GCC VAT Agreement), intra-group charges between its members are not separate supplies and so fall outside the scope of VAT. If the companies are related but not part of the same registered VAT Group, the fee is a standard-rated taxable supply, as confirmed by FTA guidance on asset management fees.1 2

What the law says

A VAT Group is treated as a single taxable person, so transactions between its members are not supplies for VAT purposes.1
Management, sales, distribution and performance fees are standard-rated supplies according to FTA guidance.2 Based on FTA guidance

What it depends on

The companies must both be residents of the same state and formally registered as a VAT Group for the disregard to apply.1
If the entities are related but not part of the same Tax Group, fees charged between them remain standard-rated.2 Based on FTA guidance

Check before you rely on it

Confirm whether the companies are registered together as a single VAT Group with the FTA.
Check the fee agreement to see if VAT is already being charged or treated as intra-group.

Note: This guidance addresses financial services examples; confirm your specific management fee arrangement is of the same nature before relying on it.

Sources (2) — read the official text

1Common VAT Agreement of the States of the Gulf Cooperation Council…Article 4GCC Agreement

Article (4)

Read the article
Article (4) VAT Group Each Member State may treat the VAT Group as a single Taxable Person in accordance with the rules and conditions it puts in place for that purpose. A VAT Group means two or more Corporate Persons who are Residents of the same Member State. Chapter Two Supplies within the Scope of the Tax

Official PDF, p. 4Captured from the FTA website on 9 Sep 2026
2Financial Services VAT GuideFTA guidance

Read the article
Disbursements, e.g. collection of Outside scope legal fees; cost recoveries (repossessions, irrecoverable tracing fee, auctioneer's commission, storage fees, towing fees, legal fees); sales agent fees etc. Settlement fees between banks Standard rate Correspondent Bank services Standard rate It is important that the services are supplied to the customer and not the financial institution for these to qualify as disbursements. All such contracts should be analysed in detail. These will be standard-rated unless there is no consideration and it is merely a pass through of the correspondent bank’s fees. 2. Asset Management and Private banking Fee Type/Activity VAT Liability Management fees, sales fees, distribution fees, performance fees, etc. Standard rate Notes Revenue sharing arrangements - Standard rate revenue share between Asset Management company and Private Banking Business Unit (two different entities and not part of same Tax Group) This is consideration for a supply. Revenue share with third party Standard rate companies on account of performance fee earned on funds As above Retrocessions / Rebates commissions received from fund 25 Standard rate VAT Guide | Financial Services | VATGFS1

Official PDF, p. 26Captured from the FTA website on 9 Sep 2026

Helpful?

It depends on whether the companies are registered together as one VAT Group. If they are, fees between them are usually ignored for VAT; if not, the management fee is charged VAT at 5%.

What the law says:
- A VAT Group is treated as a single taxable person, so transactions between its members are not supplies for VAT purposes. [1]
- Management, sales, distribution and performance fees are standard-rated supplies according to FTA guidance. [2]

What it depends on:
- The companies must both be residents of the same state and formally registered as a VAT Group for the disregard to apply. [1]
- If the entities are related but not part of the same Tax Group, fees charged between them remain standard-rated. [2]

Check before you rely on it:
- Confirm whether the companies are registered together as a single VAT Group with the FTA.
- Check the fee agreement to see if VAT is already being charged or treated as intra-group.

Note: This guidance addresses financial services examples; confirm your specific management fee arrangement is of the same nature before relying on it.

Sources:
1. Common VAT Agreement of the States of the Gulf Cooperation Council… — Article 4
2. Financial Services VAT Guide — p. 26

Written by AI from the FTA sources above and checked before display. Not tax advice or official FTA information - confirm with a tax adviser before you act. Full disclaimer

Is VAT charged on management fees charged within a group?

The detail

What the law says

What it depends on

Check before you rely on it

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