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European Commission - Press release

Taxation: GERMANY referred to the Court for limitation of VAT exemption granted to shared services

Brussels, 26 February 2015

The European Commission has decided to refer Germany to the Court of Justice of the European Union to ensure that the German VAT legislation on exemptions for sharing costs of services complies with EU law.

Cost sharing groups are associations of taxpayers who come together to purchase services from third parties. The VAT Directive exempts from VAT services that cost sharing groups can supply to their members under the following conditions: the members' activities should be exempted from VAT, the shared services should be directly necessary to the members' activities, the group should claim exact reimbursement of each member's share of the joint expenses and finally, such exemption should not cause distortions of competition. This rule does not limit the exemption to any sector.

The German VAT legislation exempts only groups from the health and medical sector. Groups from other sectors have to pay VAT on shared services. By restricting the VAT exemptions to services in the medical and health care sector, the German VAT legislation conflicts with EU law.

The Commission sent a request taking the form of a reasoned opinion to Germany on 6 April 2011 (IP/11/428). Germany was requested to extend the scope of the domestic VAT provisions for failure to comply with the VAT Directive. As the national legislation was not amended, the case is now being referred to the Court of Justice of the European Union.

Useful links

More information on the case is available at:

For press releases on infringement proceedings in the areas of taxation and customs see:

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

For more information on EU infringement procedures, see MEMO/12/12

On the February infringement package decisions, see MEMO/15/4489


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