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Belgium: VAT exemption (prior law) found contrary to EU law (CJEU judgment)

Belgium: VAT exemption found contrary to EU law

The Court of Justice of the European Union (CJEU) issued a judgment in a case concerning prior value added tax (VAT) rules in Belgium. Under the previous VAT rules (revised in 2016) , a VAT exemption was available for “independent groups of persons” and the CJEU found that this exemption was contrary to EU law when it denied the application of the exemption to a group that provided services also to non-members.


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The case is: Infohos (C-400/18, 20 November 2019)

KPMG observation

The CJEU’s judgment broadens the previous scope of application of this VAT exemption in Belgium. However, it remains to be seen what the judgment’s implications will be given the mid-2016 adjusted scope of the exemption.

Prior law and rules for VAT exemption

The VAT exemption for independent groups of persons (also referred to as the exemption for cost-sharing associations) was available to groups of VAT-exempt enterprises and non-taxable persons that conducted activities in the public interest. Under the prior Belgian law, one of the requirements for the application of the VAT exemption was that the group provided services exclusively to its members. As a result, when a group also provided services to non-members, it was subject to VAT with regard to all its services—including those provided to members—and was fully excluded from the application of the VAT exemption.

The entity in this case was an association that specialized in information technology for hospitals and provided services to members as well as to non-members. Also, it signed a cooperation agreement with a group to develop new software applications for its member hospitals. The entity was not registered for VAT in Belgium because it considered itself as a non-VAT taxable person or, at least, as an exempt independent group of persons.

The Belgian VAT authorities, however, considered the group to be a third party and claimed that the mutual provision of services between the entity and the group was subject to VAT.

The CJEU concluded that the former rules under Belgian law for implementing the VAT exemption for independent groups of persons was against EU law when the application of the exemption was conditional on the fact that independent groups of persons only provide services to their members.

Read a November 2019 report prepared by the KPMG member firm in Belgium

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