On 20 November 2019, the European Court of Justice gave its judgment in case C-400/18 (Infohos). The case deals with the question if IT related services performed by an association of hospitals to its members and to non-members are exempt from VAT.
Context: Reference for a preliminary ruling – Taxation – Value added tax (VAT) – Sixth Directive 77/388/EEC – Article 13A(1)(f) – Exemptions – Services supplied by independent groups of persons – Services provided to members and non-members
Article in the EU VAT Directive
Article 13A(1)(f) of Directive 77/388/EEC of 17 May 1977, now Article 132(1)(f) of Directive 2006/112/EC
Article 132 (Exemption)
1. Member States shall exempt the following transactions:
(f) the supply of services by independent groups of persons, who are carrying on an activity which is exempt from VAT or in relation to which they are not
taxable persons, for the purpose of rendering their members the services directly necessary for the exercise of that activity, where those groups merely claim from their members exact reimbursement of their share of the joint expenses, provided that such exemption is not likely to cause distortion of competition;
Facts
Infohos is an association that specializes in hospital information technology. It provides IT services to hospitals affiliated with it as well as to non-members.
It entered into a cooperation agreement with IHC-Group NV to jointly, but at the order of Infohos, develop new or innovative software applications for the hospitals affiliated with it.
Infohos did not register as a taxable person because it considered that it could not be regarded a taxable person or, at the very least, it would qualify for the VAT exemption.
The Belgian tax authorities took the view that the mutual services between Infohos and IHC-Group should be subject to VAT. Moreover, according to the tax authorities, the carrying out of taxable transactions for non-members meant that transactions for members of Infohos also had to be subject to VAT, and that Infohos was therefore no longer eligible for the VAT exemption, for the services provided to its members.
The Hof van Cassatie (High Court in Belgium) decided to refer the following question to the Court for a preliminary ruling:
“Must Article 13A (1) (f) [of the Sixth Directive], now Article 132 (1), (f), [of the VAT Directive] be interpreted as allowing the Member States to benefit from the exemption provided for therein to attach an exclusivity condition whereby an independent group that also provides services to non-members is also fully subject to VAT for services provided to members?”
Questions
Must Article 13.A(1)(f) of Directive 77/388/EEC 1 of 17 May 1977, now Article 132(1)(f) of Directive 2006/112/EC 2 of 28 November 2006, be interpreted as permitting Member States to attach an exclusivity condition to the exemption provided for therein, whereby an independent group which also supplies services to non-members is also liable in full to VAT for the services supplied to its members?
AG Opinion
Article 13A(1)(f) of Directive 77/388/EEC of 17 May 1977, now Article 132(1)(f) of Directive 2006/112/EC of 28 November 2006, must be interpreted as not permitting Member States to attach to the exemption laid down therein an exclusivity condition in accordance with which an independent group that also supplies services to persons who are not members is fully liable for VAT, even in respect of the services which it supplies to its members.
It is for the national court to ascertain whether the conditions for the application of the exemption laid down in that provision are satisfied. Where services are also supplied to persons who are not members, the national court must, so that the purpose of the exemption is not undermined, check that the services supplied to non-members are not quantitatively predominant by comparison with those supplied to members and that there are reasons of technical efficiency for the services supplied to non-members from which members might also benefit.
Decision
Art. 13 Part A, Paragraph 1, Letter f of the Sixth Council Directive 77/388 / EEC of 17 May 1977 on the harmonization of the laws of the Member States on sales taxes – Common VAT system: uniform taxable assessment base is to be interpreted as meaning that it is a national Provision such as the one at issue in the main proceedings, which makes the granting of the VAT exemption dependent on the independent groups of persons providing services exclusively to their members, with the result that such groups, which also provide services to non-members, are fully liable for VAT for the services provided to their members.
Source
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