EGC VAT Case T-172/26 (bett1.de) – Questions – Is a statutory cost reimbursement a VATable service supply?

Summary

Facts: An applicant (bett1.de GmbH) sent a warning letter to a defendant (Emma Matratzen GmbH) concerning misleading advertising. The applicant incurred legal costs for this warning letter, which the defendant was statutorily required to reimburse under German law, as the advertising was deemed an unfair commercial practice.
Context: The German legal system (UWG and BGB) establishes that the costs of a justified warning letter, even without express instruction from the recipient, are reimbursable by the infringing party. German tax authorities and courts have historically considered the sending of such a warning letter as a “supply of a service” for VAT purposes.
Recent Development: A recent ruling by the Court of Justice of the European Union (CJEU) in “Svilosa” (C-535/24, EU:C:2025:744) indicated that non-contractual reimbursement obligations based on national law are not relevant for EU law regarding “supply for consideration,” casting doubt on the previous German interpretation.
Issue: The core issue is whether a warning letter, sent by one undertaking to another due to an infringement, constitutes a “supply of a service for consideration” under EU VAT Directive Article 2(1)(c) and 24(1), even if the recipient did not explicitly request it but is statutorily obliged to reimburse the costs.
Question to the Court: The Higher Regional Court of Düsseldorf asks the CJEU for a preliminary ruling on whether Article 2(1)(c), read with Article 24(1), of the VAT Directive, should be interpreted as meaning that a warning letter constitutes a “supply of a service for consideration” under these circumstances.

Articles in the EU VAT Directive

The Case discusses the interpretation of the following articles from the EU VAT Directive (Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax):

Article 2(1)(c): This article is central to the question, as it defines what constitutes a “supply of services for consideration.”
Article 24(1): This article further defines “supply of services.”
Article 168(a): This article relates to the right to deduct input tax.

Additionally, the text mentions Article 200 et seq. of the VAT Directive in the context of the supplier (applicant) being required to issue an invoice for the supply and VAT to the recipient of the service, although the specific provisions within “et seq.” are not detailed.

Questions

Must Article 2(1)(c), read in conjunction with Article 24(1), of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1; ‘the VAT Directive’) be interpreted as meaning that a warning letter sent by a taxable undertaking (‘the issuing undertaking’) to another undertaking constitutes a ‘supply of a service for consideration’ where (i) the undertaking receiving the warning letter (‘the recipient undertaking’) has infringed statutory obligations, (ii) the issuing undertaking therefore has a claim to compel the recipient undertaking to refrain from doing something, and (iii) the recipient undertaking is required under statute to reimburse the costs incurred by the issuing undertaking on account of the warning letter, even though the recipient undertaking did not expressly task the issuing undertaking with sending the warning letter?

ECJ Cases referred to

C-535/24, Svilosa, EU:C:2025:744 (Judgment of 2 October 2025): This is a very recent judgment that significantly influences the current reference for a preliminary ruling. It concerned a Bulgarian undertaking sending a warning letter regarding a debt, and the Bulgarian tax authorities’ attempt to charge VAT on the lawyers’ remuneration. The Court in Svilosa “emphasised the absence of a legal relationship as regards the warning letter and the related costs and held that non-contractual reimbursement obligations based on national law were not relevant for EU law (paragraph 27).”

Other cases referred to for comparison and context, primarily concerning compensation in the event of “no-shows” or contractual relationships:

C-277/05, Société thermale d’Eugénie-les-Bains, EU:C:2007:440 (Judgment of 18 July 2007): Cited as a case where “no services have been supplied for consideration in the event of the cancellation of a hotel reservation.”
C-289/14 and C-250/14, Air France-KLM and Hop!-Brit Air, EU:C:2015:841 (Judgment of 23 December 2015): Cited as a case where “air tickets issued but not used constitute a service for consideration.”
C-622/23, rhtb, EU:C:2024:994 (Judgment of 28 November 2024): Referred to regarding “the liability to VAT of remuneration for a supply of services not carried out following the termination of a contract concluded for that supply of services.”
C-11/15, Odvolací finanční ředitelství v Český rozhlas, EU:C:2016:470 (Judgment of 22 June 2016): The Court in this case “ruled that an agreement must exist between the recipient of the supply and the service provider on the service supplied (paragraphs 20 and 24) and, for that reason too, it answered in the negative the question of whether there was a supply for consideration in the case of a statutory broadcasting fee.”
C-249/22, Gebühren Info Service GmbH (GIS), EU:C:2023:813 (Judgment of 26 October 2023): Mentioned in relation to other rulings on statutory broadcasting fees, where the Court “has justified national rules on liability to VAT only on the basis of specific transitional provisions.”