General Court VAT Case – T-444/25 (Cavert) – Questions – VAT Exemptions for Care Services in Dutch VAT Groups

Summary

Background of the Case: The requesting party is a VAT group comprised of five entities, including two foundations and three private limited companies, providing various care services for individuals with intellectual disabilities. Only one foundation is officially recognized as a care institution, exempting its services from VAT.
Legal Inquiry: The case questions whether the VAT exemption for services applies to all members of the VAT group or only to the recognized foundation. The Dutch Supreme Court has referred this issue to the Court of Justice of the European Union (CJEU) for clarification.
Preliminary Questions: The CJEU is asked to determine if Article 11 of the VAT Directive 2006/112, in conjunction with Article 132(1), requires that each member of the VAT group individually meets the exemption criteria, or if compliance by one member suffices for the entire group.
Relevant Case Law: The decision references recent jurisprudence, including cases like C-184/23 Finanzamt T II and C-141/20 Norddeutsche Gesellschaft für Diakonie mbH, which address similar issues regarding VAT exemptions and the conditions applicable to care services.
Implications for Taxation Policy: This case highlights the complexities of VAT regulations in the context of care services and the operational structure of VAT groups, potentially impacting how exemptions are applied across different entities within such groups.

Facts & Background

VAT Group Composition: The requesting party consists of five entities, including two foundations and three private limited companies, providing care for individuals with intellectual disabilities.
VAT Exemption Status: Only one foundation is officially recognized as an intramural care institution, exempting its services from VAT.
Central Question: The key issue is whether the services of the other group members are also exempt from VAT following a favorable ruling from the Court of Appeal.
Legal Challenge: The Secretary of State for Finance has contested the ruling, prompting the Supreme Court to seek clarification.
CJEU Referral: The Supreme Court has referred the matter to the CJEU to determine if all VAT group members must individually meet exemption criteria or if compliance by the recognized foundation is sufficient.

Articles in the EU VAT Directive

Article 11 and article 132(1)(b) and (g)

Article 11 (Taxable person – VAT grouping)
After consulting the advisory committee on value added tax (hereafter, the ‘VAT Committee’), each Member State may regard as a single taxable person any persons established in the territory of that Member State who, while legally independent, are closely bound to one another by financial, economic and organisational links.
A Member State exercising the option provided for in the first paragraph, may adopt any measures needed to prevent tax evasion or avoidance through the use of this provision.

Article 132
1. Member States shall exempt the following transactions:

(b) hospital and medical care and closely related activities undertaken by bodies governed by public law or, under social conditions comparable with those applicable to bodies governed by public law, by hospitals, centres for medical treatment or diagnosis and other duly recognised establishments of a similar nature;
(g) the supply of services and of goods closely linked to welfare and social security work, including those supplied by old people’s homes, by bodies governed by public law or by other bodies recognised by the Member State concerned as being devoted to social wellbeing;

Questions

1. Is Article 11 of the 2006 VAT Directive read in conjunction with Article 132(1)(b) and (g) of Regulation (EC) VAT Directive 2006 must be interpreted as meaning that the exemptions apply only to the extent that the provisions of the VAT group vis-à-vis third parties in return for remuneration shall be provided by a legally independent member of the VAT group which, viewed individually, satisfies all the conditions for application of these exemptions?
2. If Question 1 is in the negative, is answered is sufficient for the applicability of Article 132, points (b) and (g) of paragraph 1 and Article 133(a) of VAT Directive 2006 in respect of all the products referred to in those provisions services provided by the VAT group to third parties in return for remuneration, only one legally independent member of the VAT group satisfies the all the conditions for the application of those exemption provisions?

Source

Reference to other ECJ Cases