EGC T-575/24 (Digipolis) – Judgment – Public Law body Held Liable for VAT on Telecommunication Services Provided

On February 25, 2026, the General Court issued the Judgment in the case T-575/24 (Digipolis).

Context: Reference for a preliminary ruling – Taxation – Value added tax (VAT) – Directive 2006/112/EC – Article 2(1)(c) – Taxable transactions – Articles 9 to 13 – Concept of ‘taxable person’ – Intermunicipal cooperation – Provision of services by an association to its members for remuneration – Belgian administrative tolerance which allows the association and its members to be regarded as a single taxable person

Summary

Facts of the Case: The case involves a dispute between the Belgian State and Digipolis Antwerpen AG regarding VAT liability for telematics services provided by Digipolis, a public law body created for intermunicipal cooperation. Digipolis supplied these services to its members, leading to a tax inspection by the Belgian authorities that deemed some of these services taxable.
Questions to the Court: The Court of Appeal of Antwerp referred two primary questions: whether the services provided by Digipolis should be subject to VAT, given the “emanation” theory that treats the association as an extension of its members, and whether a distinction in VAT treatment should exist between founding and non-founding members of the association.
Decision: The General Court ruled that Digipolis must be regarded as liable for VAT on the services it provided, without distinction between its members based on VAT status. The Court emphasized that the services were provided for consideration and that Digipolis operated independently as a taxable person.
Justification of Decision: The Court justified its decision by asserting that the activities of Digipolis constituted an economic activity under EU VAT law, and the “emanation” theory does not exempt it from VAT. Furthermore, the Court noted that treating the services as self-supplies would lead to significant distortions of competition, thus supporting the classification of Digipolis as a taxable person.
Conclusion: The Court concluded that the interpretation of the VAT Directive must reflect that public law bodies, like Digipolis, are liable for VAT when engaging in economic activities, ensuring consistency and neutrality in VAT application across different entities, regardless of their public or private status.

Article in the EU VAT Directive

Articles 2, 9 and 13

Article 2 – Taxable transactions

Article 9
1. ‘Taxable person’ shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity.
Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as ‘economic activity’. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity.
2. In addition to the persons referred to in paragraph 1, any person who, on an occasional basis, supplies a new means of transport, which is dispatched or transported to the customer by the vendor or the customer, or on behalf of the vendor or the customer, to a destination outside the territory of a Member State but within the territory of the Community, shall be regarded as a taxable person.

Article 13
1. States, regional and local government authorities and other bodies governed by public law shall not be regarded as taxable persons in respect of the activities or transactions in which they engage as public authorities, even where they collect dues, fees, contributions or payments in connection with those activities or transactions.
However, when they engage in such activities or transactions, they shall be regarded as taxable persons in respect of those activities or transactions where their treatment as non-taxable persons would lead to significant distortions of competition.
In any event, bodies governed by public law shall be regarded as taxable persons in respect of the activities listed in Annex I, provided that those activities are not carried out on such a small scale as to be negligible.
2. Member States may regard activities, exempt under Articles 132, 135, 136 and 371, Articles 374 to 377, Article 378(2), Article 379(2) or Articles 380 to 390b, engaged in by bodies governed by public law as activities in which those bodies engage as public authorities.

Facts

Establishment and Purpose: In 2003, the cities of Ghent and Antwerp, along with their public social welfare centers (OCMWs), established Digipolis as a public legal entity to manage, operate, and develop telematics services, aligning policies and strategies for mutual synergies.
Membership and Structure: Initially, Ghent and Antwerp held shares in Digipolis, but a 2010 amendment allowed additional autonomous agencies to join without shares, broadening the association’s participant base.
Services and VAT Audit: Digipolis provided ICT services to both members and non-members. A VAT audit for 2014-2016 led the Belgian State to claim VAT on fees charged to members, arguing these transactions were taxable, resulting in significant VAT and penalty claims.
Subsequent VAT Payments and Dispute: For 2017-2020, Digipolis paid VAT on member fees but later reclaimed it, leading to a dispute with the Belgian State, which refused the refund, prompting legal action by Digipolis.
Legal Proceedings: The Court of First Instance ruled against the VAT claims for 2014-2016 and reopened debates for 2017-2020. The case was escalated to the Court of Appeal, which referred questions to the European Court of Justice regarding VAT liability on services provided by Digipolis.

Question

Are Articles 2, 9 and 13 of […] Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and the principle of neutrality infringed if those provisions are interpreted as meaning that, by joining a commissioning association, participants who have made a conferral of management are not liable for VAT when they avail themselves of the services of the commissioning association since, in the context of the conferral of management, the latter is deemed to be acting in place of its members, with the result that services provided by the commissioning association to the participants are deemed to be services provided to itself and thus there is no participation in trade/taxable transactions? In the light of these provisions, should a distinction be made in this respect between participants in the commissioning association for the purpose of Article 13 of […] Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and participants for the purpose of Articles 9 and 132 of […] Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax?

AG Opinion

Article 9 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, in the version applicable to the years at issue from 2014 to 2020, as most recently amended by the Act concerning the conditions of accession of the Republic of Croatia and the adjustments to the Treaty on European Union, the Treaty on the Functioning of the European Union and the Treaty establishing the European Atomic Energy Community,

must be interpreted as precluding the application of national legislation or of a national administrative practice under which services provided by an association to its members, for remuneration, are deemed to be internal transactions, with the result that they fall outside the scope of that directive, although that association, acting independently, must be regarded as a taxable person within the meaning of Article 9 of that directive and does not fall within the scope of Articles 11 or 13 thereof.

Decision

Articles 2, 9 and 13 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax

must be interpreted as meaning that:

– a legal person governed by public law organised as a commissioning association, whose activity consists in supplying telematics services and making related supplies of computer equipment to its members in the context of a conferral of management, must be regarded as liable to value added tax (VAT), there being no need, in that regard, to distinguish between its members according to their status for VAT purposes, provided that those services are supplied for consideration and that the association carries out, independently, an economic activity;

– a national tax practice leading to those supplies of services being analysed as self-supplies of services performed by the members of the commissioning association is not such as to call into question that association’s liability to VAT.

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