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Brussels, 6 April 2011

Taxation: Commission requests Germany to extend VAT exemptions for sharing costs of services

The European Commission has formally requested Germany to amend its value added tax (VAT) legislation so as to extend the scope of the exemption from VAT for services supplied to their members by independent groups of persons with no right to deduct VAT. German legislation restricts this possibility to services in the medical and health care sector, whereas EU law requires such VAT exemptions to be available in all sectors. The Commission's request takes the form of a "Reasoned Opinion" (second step of EU infringement proceedings). In the absence of a satisfactory response within two months, the Commission may refer Germany to the EU's Court of Justice.

The VAT Directive exempts from VAT services that cost sharing groups can supply to their members under a series of conditions: the members' activities should be exempt from VAT, the shared services should be directly necessary to the members' activities, the group should claim from exact reimbursement of each member's share of the joint expenses and finally, such exemption should not cause distortions of competition.

However, current German legislation exclusively refers to associations in the health and medical care sector. This is contrary to the VAT Directive which does not limit exemptions to special professions.

As a consequence, taxpayers in sectors other than health and medical care who set up a cost sharing grouping currently have to pay VAT on their shared services.

For the press releases issued on infringement proceedings in the area of taxation or customs see:

For the most up-to-date general information on the infringement proceedings initiated against Member States, see:

For more information on EU infringement procedures, see MEMO/11/220

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