Last update: March 14, 2025
Relevant article in the EU VAT Directive 2006/112/EC
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.
ECJ Cases decided
- C-107/84 (Commission of the European Communities v. Federal Republic of Germany)
- C-235/85
- Joined Cases 231/87 and 129/88 (Ufficio distrettuale delle imposte dirette di Fiorenzuola d’Arda and others v. Comune di Carpaneto Piacentino and others)
- Public bodies are taxable when activities are carried out under the same legal conditions as private operators.
- Acting “as a public authority” requires a special legal regime.
- Competition distortion is the decisive benchmark.
- C-4/89 (Comune di Carpaneto Piacentino and others) – Public bodies are taxable persons in activities where they compete with private individuals
- C-202/90 (Ayuntamiento de Sevilla v. Recaudadores de Tributos de la Zonas Primera y Segunda)
- Collection of public levies and charges can still fall outside VAT.
- Absence of a market and exercise of public powers is decisive.
- Reinforced the “public authority” exclusion.
- C-247/95 (Finanzamt Augsburg-Stadt v. Marktgemeinde Welden)
- C-276/97 (Commission of the European Communities v. the French Republic)
- C-358/97 (Commission v. Republic of Ireland)
- C-359/97 (Commission v. the United Kingdom of Great Britain and Northern Ireland)
- C-408/97 (Commission of the European Communities v. the Kingdom of the Netherlands)
- C-260/98 (Commission of the European Communities v. the Hellenic Republic)
- C-446/98 (Fazenda Pública) – Significant distortion of competition – Criteria can be determined by Ministry of finance if allowed by national constititutionnal order
- C-287/00 (Commission of the European Communities v. the Federal Republic of Germany)
- C-378/02 (Waterschap Zeeuws Vlaanderen) – Public authority – Transaction engaged in as taxable person and transaction engaged in as non-taxable person – Right to adjustment and deduction
- C-284/04 (T-Mobile Austria and Others) – Auctioning of the UMTS licences is not a taxable transaction
- C-369/04 (Hutchison 3G and Others) – Auctioning of the UMTS licences is not a taxable activity
- C-430/04 (Feuerbestattungsverein Halle) – Public bodies are taxable persons in case of competition with private persons
- C-442/05 (Finanzamt Oschatz v. Zweckverband zur Trinkwasserversorgung und Abwasserbeseitigung Torgau-Westelbien)
- C-408/06 (Landesanstalt für Landwirtschaft, Abteilung Förderwesen und Fachrecht v. Franz Götz)
- C-288/07 (Isle of Wight Council and Others) – Ruling on the meaning of significant distortion of competition
- Public bodies are taxable if non‑taxation would cause significant distortion of competition.
- Distortion is assessed objectively, not hypothetically.
- Article 13 must be interpreted narrowly.
- C-456/07 (Mihal) – A bailiff is a taxable person
- C-554/07 (Commission/Ireland)
- C-102/08 (SALIX Grundstücks-Vermietungsgesellschaft) – Taxable person if distortion of competition
- C-154/08 (Commission v Spain) – Services rendered by the ‘registradores de la propiedad’ are subject to VAT
- C‑246/08 – Commission v Finland
- State legal aid services supplied for remuneration may be taxable.
- Public funding does not automatically exclude economic activity.
- Focus on the nature of the activity, not its purpose.
- C-79/09 (Commission v Netherlands) – Dutch exemption for making personnel available in the socio-cultural sector, the health sector, the education sector, … has not been removed
- C-72/13 (Gmina Wrocław) – Transfer by a municipality of elements of its heritage
- C-174/14 (Saudaçor) – Company of the Azores Autonomous Region carries out economic activity
- A publicly owned entity can still act independently.
- Acting in the public interest ≠ acting as a public authority.
- Economic reality prevails over institutional form.
- C-276/14 (Gmina Wroclaw) – Municipal budgetary entities cannot be regarded as taxable persons
- Municipal entities can be taxable persons if operationally independent.
- Internal public-law organisation does not prevent VAT taxation.
- Clarified interaction between Articles 9 and 13.
- C-520/14 (Gemeente Borsele and Staatssecretaris van Financiën) – An authority providing transport services for schoolchildren is not a taxable person
- School transport by municipalities may fall outside VAT.
- No economic activity where fees are symbolic and costs largely subsidised.
- Introduced a “cost‑coverage” relevance test.
- C-11/15 (Český rozhlas) – Public broadcasting activities by Czech Radio outside scope of VAT
- C-344/15 (National Roads Authority) – Body governed by public law which collects tolls on roads may not be regarded as competing with private operators
- Road toll activities can constitute economic activity.
- Public mandate alone does not exclude VAT.
- Strong emphasis on market comparability.
- C-37/16 (SAWP) – Authors/artists do not provide a service for producers and importers of reproduction rights
- C-182/17 (Nagyszénás Településszolgáltatási Nonprofit Kft.) – Company of a municipality to which public tasks are assigned – Concept of “public body”
- Local authorities leasing infrastructure may be taxable.
- Article 13 does not shield commercial exploitation.
- Reinforces neutrality and competition principles.
- C-612/21 Gmina O. (Municipality of O.) – A municipality is not a taxable person due to a project to increase the proportion of renewable energy sources
- C-616/21 Gmina L. (Municipality of L.) – A municipality is not a taxable person for contracting out removal of asbestos
- C-344/22 (Gemeinde A) – Access for free to spa facilities is not a taxable transaction if remuneration is a tourist tax
- T-575/24 (Digipolis) – Public Law body Held Liable for VAT on Telecommunication Services Provided – VATupdate
Pending ECJ Cases
- None
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