Comments on GC T‑575/24 – AG – Contrary to EU law if services provided to members are regarded as internal acts

Advocate General’s Ruling: Advocate General Martín y Pérez de Nanclares concluded that Belgium’s classification of services provided by an association to its members as internal transactions, thus exempting them from VAT, is contrary to EU law.
Background of Digipolis: Founded in 2003 by several Belgian cities, Digipolis is a commissioned association that offers ICT services to both members and non-members, expanding its operations over the years to include various activities of general interest.
Tax Authority Dispute: The Belgian tax authorities argued that VAT should have been paid on services provided to new member entities from 2014 to 2020, but Digipolis contested this, leading to the Belgian court’s referral for a preliminary ruling on the matter. The Advocate General emphasized that the association qualifies as a taxable person under Article 9 of the VAT Directive.

VAT Applies to Paid Services by Associations to Members, Not Internal Transactions

Digipolis België supports the cities of Ghent and Antwerp and their public welfare centers with ICT services and digital transformation.
In 2017, a tax audit led the Belgian tax authority to claim that Digipolis’s fees to its members are subject to VAT.
The dispute centers on the “emanation theory,” which treats services to members as internal and not taxable under Belgian administrative tolerance.
The Antwerp Court of Appeal questioned if this tolerance aligns with the EU VAT Directive and referred the matter to the EU Court of Justice.
Advocate General Martín y Pérez de Nanclares advised that the VAT Directive opposes national practices treating such services as non-taxable if the association is an independent taxable person.