Advocate General’s Opinion on VAT Exemption for Cost-Sharing Groups in EU Law

• The case involves tax exemption for cost-sharing groups under VAT law.
• The Advocate General commented on the condition that the exemption should not distort competition.
• The groups were created to provide cleaning services in hospitals and educational establishments.
• External companies were contracted to manage cleaning staff and related tasks.
• Spanish tax authorities denied the exemption, citing lack of direct service provision by the groups and potential competition distortion.
• The plaintiffs appealed, and the case was referred to the Court of Justice for interpretation of the VAT Directive.
• The Advocate General stated that services are necessary for exempt activities even if not directly provided by the groups.
• The exemption should not disadvantage smaller companies compared to larger ones.
• No competition distortion occurs if services are typically part of tax-exempt activities.
• Improper application of the exemption includes providing services to non-members or not tailoring services to members’ needs.
• The VAT Directive was fully incorporated into German law on January 1, 2020.

Source: hub.kpmg.de

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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