European Court – T-309/26 (Agora Hospitality) – Questions – VAT on bundled hotel services: single vs. multiple supply

Request for a preliminary ruling submitted to the General Court of the European Union (Case T-309/26). It concerns a tax dispute between Agora Hospitality SA and the Belgian State regarding the Value Added Tax (VAT) treatment of services offered by a hotel. The core of the dispute revolves around whether bundled services, such as those provided for seminars, should be considered as separate supplies, each with its own VAT rate, or as a single, complex supply subject to a uniform VAT rate. The referring court, the Tribunal de première instance du Brabant wallon (Court of First Instance, Walloon Brabant, Belgium), is seeking clarification from the Court of Justice of the European Union on the interpretation of EU VAT law to resolve this matter.

Articles of the EU VAT Directive 2006/112/EC discussed

Article 1(2) (second subparagraph): This article is fundamental to the entire case. It states: “On each transaction, VAT, calculated on the price of the goods or services at the rate applicable to such goods or services, shall be chargeable after deduction of the amount of VAT borne directly by the various cost components.” The Court of Justice derives the principle that each transaction must be considered individually from this article. The preliminary ruling questions specifically ask for an interpretation of this article.
Article 2(1)(c): This article defines the scope of VAT, stating that “The following transactions shall be subject to VAT: … (c) the supply of services for consideration within the territory of a Member State by a taxable person acting as such.”
Article 24(1): This article defines “supply of services” as “any transaction which does not constitute a supply of goods.”
Article 44: This article (mentioned in Question 2(a)) relates to the general rule for determining the place of supply of services between taxable persons. It generally states that the place of supply is where the recipient of the services has established their business.
Article 96: This article concerns the standard rate of VAT. It states that “Member States shall apply a standard rate of VAT, which shall be fixed by each Member State as a percentage of the taxable amount and which shall be the same for the supply of goods and for the supply of services.”
Article 98(1) and (2): These articles deal with reduced VAT rates.
- Article 98(1) states that “Member States may apply either one or two reduced rates.”
- Article 98(2) specifies that “The reduced rates shall apply only to supplies of goods or services in the categories set out in Annex III.”
  These articles are central to the debate on whether reduced rates can be applied to individual components of a bundled service or if a standard rate must apply to the entire complex supply. Questions 2(b), 3(b), and 5 specifically refer to Article 98.
Articles 168 and 176: These articles (mentioned in Questions 2(c) and 3(c)) concern the right to deduct input VAT. Article 168 generally grants taxable persons the right to deduct VAT charged on goods and services supplied to them for the purposes of their taxable transactions. Article 176 allows Member States to maintain certain exclusions from the right to deduct that existed before the Sixth VAT Directive. These articles are relevant to the implications of classifying a supply as single or multiple for the taxable person’s ability to deduct VAT.
Annex III (point 12): This Annex lists the categories of goods and services to which reduced VAT rates may be applied. Point (12) specifically includes “accommodation provided in hotels and similar establishments, including the provision of holiday accommodation and the letting of places on camping or caravan sites.” This is directly relevant to the reduced rate applied to hotel rooms.

Facts & Background

Facts: AGORA HOSPITALITY SA operates a hotel complex in Belgium offering various services including accommodation, meeting rooms, wellness, catering, and events. They offer these services individually or as packages, applying different VAT rates to each service (e.g., 6% for rooms, 12% for catering, 21% for meeting room hire and drinks). Tax inspections in 2022 and 2023 challenged this approach, arguing that certain packages constitute a single, complex supply subject to a uniform 21% VAT rate.
Issue: The core issue is whether the various services offered by Agora Hospitality, particularly in packages for residential and non-residential seminars, should be treated as separate, distinct supplies for VAT purposes (each with its own rate and rules) or as a single, complex supply (either “sui generis” or with a principal service and ancillary services) subject to a single VAT rate.
Tax Authority’s Position: The Belgian tax authorities contend that in scenarios like residential seminars (team-building events) or non-residential seminars (meeting room hire with catering), the services are so closely linked that they form a single, indivisible economic supply, subject to the standard 21% VAT rate.
Applicant’s Position: Agora Hospitality argues that each service within a package is independent and should be subject to its own appropriate VAT rate. They also highlight the implications for the right to deduct VAT and the place of supply, especially for foreign customers.
Questions to the Court of Justice: The referring court has posed several questions to the Court of Justice of the European Union, seeking clarification on how to interpret Article 1(2) of Directive 2006/112/EC. These questions aim to determine whether specific service packages (e.g., meeting room, accommodation, wellness, parking, catering) constitute distinct supplies, a single “sui generis” supply, or a single supply with a principal and ancillary services, and the resulting implications for VAT rates, deduction rights, and place of supply.

Question to the European Court

Must the second subparagraph of Article 1(2) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax be interpreted as meaning that, where a hotel offers its taxable customers a package of services consisting of (i) the hire of a meeting room equipped with IT equipment, (ii) the provision of hotel rooms with free access to wellness facilities at no extra charge, (iii) the provision of parking spaces, and (iii) [(iv)] catering services at various times of the day (breakfast, coffee breaks and meals), and where that package is invoiced as a single item but the price is calculated separately according to the number of persons using each service, and where the breakdown between the various elements of the supply is clearly indicated on the invoice, the package of services in question is to be classified as:
(a) a set of distinct supplies, each of which must be treated separately for VAT purposes, as regards both the application of rates and the implementation of the rules on the right to deduct and the place of supply?
(b) a set of distinct supplies, each of which must be treated separately for VAT purposes, as regards both the application of rates and the implementation of the rules on the right to deduct and the place of supply, with the exception of free access to the wellness facilities, which must be regarded as ancillary to the provision of hotel rooms?
(c) a single, indivisible sui generis supply of ‘residential seminar’ services?
(d) a single supply consisting of a principal service and other ancillary services?
If the answer to question 1 is that the second subparagraph of Article 1(2) of [Directive 2006/112] must be interpreted as meaning that such services constitute a single, indivisible sui generis supply of ‘residential seminar services’:
(a) must Article 44 of [Directive 2006/112] be interpreted as meaning that that supply must be subject to the general rule on the place of supply of services between taxable persons?
(b) must Article 98 of [Directive 2006/112] be interpreted as meaning that that supply is subject to the application of a standard VAT rate to the whole, even though the legislature has laid down reduced VAT rates for the provision of hotel rooms and catering services?
(c) must Articles 168 and 176 of [Directive 2006/112] be interpreted as meaning that VAT on that sui generis supply is fully deductible in the absence of specific national provisions limiting the deduction of VAT on that type of supply, provided that the formal and substantive conditions relating to the creation and exercise of the right to deduct are satisfied?
If the answer to question 1 is that the second subparagraph of Article 1(2) of [Directive 2006/112] must be interpreted as meaning that such services constitute a single supply consisting of a principal service and other ancillary services:
(a) what, in that case, is the principal service?
(b) must Article 98 of [Directive 2006/112] be interpreted as meaning that that classification implies that the VAT rate applicable to the principal element of the supply must be applied uniformly, even where the national legislature has expressly provided for separate VAT rates for some of those elements and not for others?
(c) must Articles 168 and 176 of [Directive 2006/112] be interpreted as meaning that that classification implies that the deduction rules applicable to the principal supply must be applied uniformly, even where the legislature has expressly provided for restrictions on the right to deduct in respect of ancillary elements of the supply?
Must the second subparagraph of Article 1(2) of [Directive 2006/112] be interpreted as meaning that, where a hotel offers its taxable customers a package of services consisting of (i) the hire of a meeting room equipped with IT equipment, (ii) a catering service, the latter being optional, that package of services must be classified as:
(a) a set of distinct supplies, each of which must be treated separately for VAT purposes, as regards both the application of rates and the implementation of the rules on the right to deduct and the place of supply?
(b) a single supply consisting of the principal service of room hire and an ancillary catering service?
If the answer to question 4 is that the catering service is ancillary to the meeting room hire service, must Article 98 of [Directive 2006/112] be interpreted as meaning that the fact that the Belgian legislature has chosen to apply a reduced rate to catering services allows that reduced rate to be applied to that element of the supply irrespective of its ancillary nature?

Source

Curia

Reference to other ECJ Cases

Case C-349/96, CPP (Card Protection Plan): This is a foundational case often cited for the general principle that each supply should normally be regarded as distinct and independent. However, it also established that a transaction comprising a bundle of features and acts should not be artificially split if it forms a single economic supply.
Case C-41/04, Levob Verzekeringen and OV Bank: This case reinforces the idea that a transaction should not be “artificially disassembled” if it forms, “objectively, from an economic point of view, a whole transaction, which it would be artificial to split.”
Case C-42/14, Wojskowa Agencja Mieszkaniowa w Warszawie: This case reiterates the principle that each transaction is normally distinct and independent, but also emphasizes that a transaction should not be artificially split if it forms an indivisible economic supply.
Case C-463/16, Stadion Amsterdam CV: This ruling clarified that if a single supply consists of a principal and an ancillary element, and these elements would have different VAT rates if supplied separately, the entire supply must be taxed at the rate applicable to the principal supply. It is not permissible to apply two different VAT rates in such a scenario, even if the price of each element can be identified.
Case C-581/19, Frenetikexito: This case provides guidance on determining whether a supply is ancillary to a principal supply, focusing on whether it constitutes an end in itself for the customer or a means of better enjoying the principal service.
Case C-231/19, Blackrock Investment Management (UK): This case is cited multiple times, particularly in relation to the principle that elements of a supply can be so closely linked that they form a single, indivisible economic supply which it would be artificial to split.
Joined Cases C-409/24 to C-411/24, J-GmbH and Others (Selective application of the reduced rate of VAT): This is a very recent and highly relevant set of cases (judgment issued on March 5, 2026) that directly addresses the compatibility of national VAT rules with EU law regarding whether ancillary services (like breakfast, parking, Wi-Fi, and wellness facilities) bundled with short-term accommodation can be excluded from a reduced VAT rate. The ECJ concluded that EU rules do not prevent national legislation from excluding these ancillary supplies from the reduced VAT rate, provided two conditions are met: the reduced rate applies to clearly defined elements of accommodation services, and the principle of fiscal neutrality is respected.