The Advocate General of the Court of Justice of the European Union (CJEU) issued an opinion in the European Commission’s infringement proceedings against Germany (C-616/15), concluding that the restriction in German value added tax (VAT) legislation limiting the VAT exemption for cost-sharing groups to a certain sector is not in line with the EU VAT Directive.
The EC brought infringement proceedings against Germany in 2009 about German national VAT legislation limiting the VAT exemption for cost-sharing groups to health professions. Sector limitation is not in line with the EU VAT Directive according to the EC. Germany refused the EC’s request to amend the limitation, arguing in 2011 that:
The Advocate General responded that the VAT exemption for cost-sharing groups cannot be limited to groups that perform VAT-exempt public interest activities.
In addition, the Advocate General rejected Germany’s argument that the restriction in its German national VAT legislation limiting the VAT exemption for cost-sharing groups to a certain sector is justified by the requirement that the VAT exemption for cost-sharing groups must not give rise to a distortion of competition. Any distortion of competition arising from the VAT exemption for cost-sharing groups must be examined on a case-by-case basis.
Three other EC infringement cases on the application of the VAT exemption for cost-sharing groups are pending before the CJEU. There is uncertainty as to whether the VAT exemption for cost-sharing groups will continue to apply to financial and insurance markets. The pending cases may also have implications for current exclusions under the Dutch VAT exemption for cost-sharing groups.
Read an April 2017 report prepared by the KPMG member firm in the Netherlands
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