EU General Court: VAT group membership and transfer of VAT exemption conditions
In judgment T-444/25, the General Court of the EU answered a question referred for a preliminary ruling concerning the transfer of conditions for VAT exemption between individual members of a VAT group. It confirmed that a membership in a VAT group does not, in itself, mean that all members of the VAT group should benefit from a VAT exemption linked to a special status of a service provider. Where the legislation requires specific conditions to be met for an exemption to apply, those conditions must be met directly by the member of the group that carries out the supply.
The judgment concerned a Dutch VAT group composed of several entities providing care to people with intellectual disabilities. Only one member of the group had been recognised as an institution providing health and social services that may be exempt from VAT under the VAT Directive. However, the disputed exempt services were also provided by another member of the VAT group who did not hold the required authorisation. The VAT group argued that its status as a single taxable person allowed the exemption to be applied also by other members of the group, provided that at least one of them met the statutory conditions. The Dutch tax administration took the opposite view.
The General Court rejected the VAT group’s argument. Although a VAT group is treated as a single taxable person for VAT purposes, this does not mean that authorisations or permissions on which certain exemptions are based are automatically transferred between its members. The court emphasised that the exemptions under Article 132 of the VAT Directive are linked not only to the nature of the services provided but also to the status of their provider. The Directive expressly refers to duly recognised healthcare and social welfare institutions. According to the General Court, the required recognition cannot be attributed to another member of a VAT group. Such an interpretation would undermine the purpose of the condition that links the exemption to the status of the specific service provider.
The General Court therefore concluded that, when assessing an exemption under Article 132 of the VAT Directive, it is not sufficient to rely solely on the fact that the provider is part of a VAT group. What matters is whether the member of the group carrying out the supply meets the conditions for the exemption. If that member does not have the required status as a healthcare or social welfare institution, the exemption cannot be applied.
The judgment is of broader relevance beyond healthcare and social services. It confirms the general principle that the creation of a VAT group does not alter the specific authorisations, obligations or status of each individual member.