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EU: VAT exemption for cost-sharing groups, financial and insurance markets

EU: VAT exemption for cost-sharing groups

The Advocate General to the Court of Justice of the European Union (CJEU) this week issued opinions in two cases concerning the value added tax (VAT) exemption for cost-sharing groups. The opinions conclude that the VAT exemption for cost-sharing groups cannot be applied in the financial and insurance markets, nor in cross border situations. The Advocate General also advised the CJEU to interpret narrowly a rule that application of the VAT exemption for cost-sharing groups is not likely to cause distortion of competition.


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The opinions were issued in cases concerning a referral from Latvia concerning a credit institution that had purchased various services from group companies in other EU Member States, and a referral from Poland concerning an insurance company that had requested approval to apply the VAT exemption for shared services for human resources, finance and accounting, IT, administration, customer service and product development.

KPMG observation

The Advocate General’s opinions are not binding on the court. The judges now will begin their deliberations in these cases with judgments to be given at a later date.

If the CJEU were to follow the opinions in these two cases, there could be far-reaching consequences for existing VAT cost-sharing groups in the financial and insurance market and in cross-border situations—in such situations, the VAT exemption for cost-sharing groups would no longer apply. However, if the CJEU were to reach a different conclusion, this would offer new possibilities. For instance, if the CJEU were to rule that the competition criterion must be narrowly interpreted, then the current exclusions from the Dutch VAT exemption for cost-sharing groups may be too broad. Moreover, the pending infringement proceedings against Luxembourg (no. C-275/15) and Germany (no. C-616/15) could also be relevant for the interpretation of the VAT exemption for cost-sharing groups in the Netherlands.


Read a March 2017 report prepared by the KPMG member firm in the Netherlands: Advocate General at CJEU issues Opinions on application of the VAT exemption for cost-sharing groups

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