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European Commission

Press release

Brussels, 20 February 2014

Commission takes Luxembourg to Court of Justice over VAT in the case of independent groups of persons

The European Commission has decided to take Luxembourg to the Court of Justice of the European Union over the VAT system applied by Luxembourg to independent groups of persons.

Under the VAT Directive, certain services supplied by a group to its members are exempt from VAT to avoid making operations downstream more expensive for these members, given that the VAT cannot be deducted. Strict conditions must be complied with to benefit from the exemption.

Under Luxembourg law, the services provided by an independent group to its members are free of VAT provided that the members' taxed activities do not exceed 30% (or 45% under certain conditions) of their annual turnover. Group members are also allowed to deduct the VAT charged to the group on its purchases of goods and services from third parties. Lastly, operations by a member in his or her own name but on behalf of the group are regarded as outside the scope of VAT.

Under European law, in order to be exempt from VAT the services provided by an independent group to its members must be directly required for their non-taxable or exempt activities. The Luxembourg rule providing for a ceiling for taxed operations does not fulfil this condition. Moreover, group members should not be allowed to deduct VAT charged to the group.

The European Commission consequently takes the view that these arrangements are not compatible with the EU's VAT rules. In addition, they would be likely to produce distortions of competition.


The Commission sent a reasoned opinion to the Luxembourg authorities formally requesting them to bring their legislation into line with Directive 2006/112/EC on the common system of VAT (IP/12/63).

On 7 August 2012 Luxembourg excluded from the system groups whose services were mainly used for taxed operations. However, this amendment is not sufficient to bring Luxembourg law into line with the Directive.

Useful links

For press releases on infringement cases in the taxation or customs field see:

For the latest general information on infringement measures against Member States see:

On the February infringement package decisions: MEMO/14/116

On the general infringement procedure: see MEMO/12/12


Emer Traynor (+32 2 292 15 48)

Franck Arrii (+32 2 297 22 21)

For the public: Europe Direct by phone 00 800 6 7 8 9 10 11 or by e­mail

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