Luxembourg: CJEU judgments, IPG’s VAT exemption | KPMG | GLOBAL
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Luxembourg: CJEU judgments “seal the fate” of IPGs' VAT exemption

Luxembourg: CJEU judgments, IPGs' VAT exemption

The Court of Justice of the European Union (CJEU) issued judgments that have effectively determined no application of the value added tax (VAT) under the EU VAT Directive is available with respect to services supplied by independent groups of persons (IGPs) to their members.


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The CJEU decided to limit the scope of application of the exemption provided under article 132, 1, f) of the VAT Directive—in particular, with respect to the material scope of application of the VAT exemption. The CJEU judgments provide that article 132, 1, f) would not apply to companies active in the insurance and/or financial sector, but would only be available to those carrying out activities linked to public interest. For the VAT exemption to apply, the services provided by the IGPs to their members would need to be associated with or linked to some “public interest.”

What’s next?

EU Member States using the exemption provided under article 132, 1, f) would need to review their legislation. In Luxembourg, to comply with a judgment of the CJEU specific to a case brought by the European Commission against Luxembourg, the Luxembourg government already repealed a Grand-Ducal decree on the VAT exemption for IGPs in July 2017.

Now, the Luxembourg government would need to consider and implement other alternatives (namely, VAT groups) for companies active in the financial and insurance sector.


Read a September 2017 report prepared by the KPMG member firm in Luxembourg

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