General Court T-575/24 (Digipolis) – AG Opinion – Associations Providing Paid Services to Members Are Taxable

On October 22, 2025, the General Court issued the AG Opinion 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 tax authorities and Digipolis Antwerpen AG regarding the VAT treatment of services provided by Digipolis to its non-founding members. The tax authorities contend that these services should be subject to VAT, while Digipolis argues that they fall under an administrative tolerance based on the “emanation theory,” classifying them as internal transactions not subject to VAT.
Questions to the Court: The Court of Appeal in Antwerp referred questions regarding the compatibility of the emanation theory with Directive 2006/112/EC, specifically concerning whether services provided by a commissioning association to its members can be considered internal transactions. The court also questioned whether this interpretation should differ based on the tax status of the members receiving the services.
Decision: Advocate General Martín y Pérez de Nanclares opined that the emanation theory is incompatible with Article 9 of Directive 2006/112/EC. He concluded that national legislation or administrative practices that deem services from an association to its members as internal transactions violate the directive’s definition of a taxable person.
Justification of the Decision: The Advocate General emphasized that the concept of “taxable person” under EU law requires independence in the provision of economic activities, which the emanation theory undermines by treating the association and its members as a single entity. He argued that this legal fiction contradicts the directive’s intention to ensure uniform application of VAT across member states.
Implications of the Ruling: This opinion highlights the need for member states to align their VAT legislation with EU law, particularly regarding the treatment of services provided by public entities. It reinforces the principle of fiscal neutrality and the independent nature of taxable transactions, suggesting that reliance on national theories like the emanation theory may lead to significant legal inconsistencies within the EU VAT framework.

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.

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