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Tax Connect Flash | VAT exemption for cost sharing groups


Will banking, financial and insurance sector companies be excluded?

A number of cases have recently been referred to the Court of Justice of the European Union, which will lead the Court to specify the scope of the exemption provided by the VAT Directive for services provided to their members by groups of persons for the purposes of their exempt or non-taxable activities (Art. 132 paragraph 1(f) of the Directive).

In her opinion published on 1 March 2017 in two of the cases referred to the Court regarding these provisions, the Advocate General Mrs Juliane Kokott proposes that the Court of Justice rule that the exemption for services provided by groups of persons whose services are not subject to VAT does not extend to banking, financial and insurance activities.

If the Court follows the opinion of its Advocate General, whose conclusions are based on the general economy and the purpose of the Directive and the concerned provision, this interpretation would have serious consequences for businesses in these sectors applying the exemption in question within all the EU jurisdictions where it applies up to now. Those jurisdictions would need to bring their legislation in line with the CJEU's interpretation.

With regard to other matters referred to it, the Court of Justice could, in any event, restrict the scope of this exemption in relation to other aspects such as the type of services to be exempted (see Mrs Kokott’s conclusions of 6 October 2016 in the case C-274/15 Commission v Luxembourg) and the territorial scope of application of these provisions.

Case C-605/15, Aviva and C-326/15 DNB Banka, conclusions of Mrs Juliane Kokott published on 1 March 2017.