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H0. General points on exemptions
ARTICLE 132 ​
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Activities upstream from those provided by the ultimate service provider ​
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- Medical care exemption applies to subcontracted laboratory tests
"[37] The Commission’s argument that it follows from the case-law concerning exemptions that activities carried out upstream from those provided by the ultimate service provider are not exempt (Case 107/84 Commission v Germany [1985] ECR 2655, paragraph 20; Case C‑240/99 Skandia [2001] ECR I‑1951, paragraphs 40 and 41; Case C‑235/00 CSC Financial Services [2001] ECR I‑10237, paragraphs 39 and 40; and Case C‑472/03 Arthur Andersen [2005] ECR I‑1719, paragraph 39), so that only medical tests carried out by laboratories on behalf of patients in the context of a direct contractual relationship with those patients comes within the scope of Article 13A(1)(b) of the Sixth Directive, must also be rejected, as that case-law relates to the interpretation of other exemptions, the wording and objectives of which are different from those pursued by that provision (see, to that effect, Case 107/84 Commission v Germany, paragraph 13)." (LUP C-106/05)
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- Closely related exemption applies to subcontracted transport of samples
"[28] In the present case, the patient is indifferent as to whether the laboratory which takes the sample also carries out the analysis, or subcontracts it to another laboratory but remains responsible to him for the analysis, or, because of the nature of the analysis at issue, is obliged to send the sample to a specialised laboratory. The obligation, in the last case, to send the sample to a specialised laboratory arises from the need to ensure for the patient that the analysis is as reliable as possible.
...
[30] In those circumstances, the taking of the sample and the transmission of the sample to a specialised laboratory constitute services which are closely related to the analysis, so that they must be treated in the same way as the analysis for fiscal purposes and, accordingly, must not be subject to VAT." (Commission v. France C-76/99)
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Exemptions subject to a supplier condition​
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- Specific types of supplier identified
Post: the public postal service
(a) the supply by the public postal services of services other than passenger transport and telecommunications services, and the supply of goods incidental thereto;
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Medical/dental professionals​
(c)the provision of medical care in the exercise of the medical and paramedical professions as defined by the Member State concerned;
​(e)the supply of services by dental technicians in their professional capacity and the supply of dental prostheses by dentists and dental technicians;
​Private tuition: teachers
(j)tuition given privately by teachers and covering school or university education;
Supply of staff for welfare: religious or philosophical institutions
(k)the supply of staff by religious or philosophical institutions for the purpose of the activities referred to in points (b), (g), (h) and (i) and with a view to spiritual welfare;
Subscriptions: non-profit-making organisations with certain aims
(l)the supply of services, and the supply of goods closely linked thereto, to their members in their common interest in return for a subscription fixed in accordance with their rules by non-profit-making organisations with aims of a political, trade-union, religious, patriotic, philosophical, philanthropic or civic nature, provided that this exemption is not likely to cause distortion of competition;
Sport: non-profit-making organisations
(m) the supply of certain services closely linked to sport or physical education by non-profit-making organisations to persons taking part in sport or physical education;
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Radio and television: public radio and television bodies
(q)the activities, other than those of a commercial nature, carried out by public radio and television bodies.
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- Public bodies/recognised entities
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Medical: public bodies or - if under comparable social conditions - hospitals, medical centres, "other duly recognised establishments of a similar nature"
"(b) hospital and medical care and closely related activities undertaken
[i] by bodies governed by public law or,
[ii]under social conditions comparable with those applicable to bodies governed by public law, by
hospitals,
centres for medical treatment or diagnosis and
other duly recognised establishments of a similar nature;" (formatting added)
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Welfare: public bodies and other organisations 'recognised...as...devoted to social wellbeing"
(g) the supply of services and of goods closely linked to welfare and social security work, including those supplied by old people's homes, by bodies governed by public law or by other bodies recognised by the Member State concerned as being devoted to social wellbeing;
Protection of children: public bodies and other organisations 'recognised...as...devoted to social wellbeing"
(h) the supply of services and of goods closely linked to the protection of children and young persons by bodies governed by public law or by other organisations recognised by the Member State concerned as being devoted to social wellbeing;
Education: public bodies "having such as their aim", other organisations recognised "as having similar objects"
(i) the provision of children's or young people's education, school or university education, vocational training or retraining, including the supply of services and of goods closely related thereto, by bodies governed by public law having such as their aim or by other organisations recognised by the Member State concerned as having similar objects;
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Cultural services: public bodies and "other cultural bodies recognised by the Member State"
(n) the supply of certain cultural services, and the supply of goods closely linked thereto, by bodies governed by public law or by other cultural bodies recognised by the Member State concerned;
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Transporting sick persons: "duly authorised bodies"
(p)the supply of transport services for sick or injured persons in vehicles specially designed for the purpose, by duly authorised bodies;
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- "Organisations recognised as charitable" not calling for a particularly narrow construction
"[32] Secondly, the expression ‘organisations recognised as charitable’ in Article 13A(1)(g) and (h) of the Sixth Directive does not call for a particularly narrow construction (see, to that effect, Dornier, cited above, paragraph 48)." (Kingcrest Associates Ltd C-498/03 - directive no refers to bodies devoted to social wellbeing)
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- Organisation includes natural persons
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"[36] Thus the Court has already held, in respect of a private entity aiming to make a profit, that the expression ‘other organisations recognised as charitable by the Member State concerned’ in Article 13A(1)(g) of the Sixth Directive does not exclude from that exemption natural persons running a ‘business’ (see Gregg, cited above, paragraph 21)." (Kingcrest Associates Ltd C-498/03)
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- Soloist musicians can rely on the exemption for cultural services as "cultural bodies"
"[27] Consequently, the principle of fiscal neutrality requires that individual performers, as long as their services are recognised as cultural, may be regarded, like cultural groups, as bodies similar to public-law bodies supplying certain cultural services mentioned in Article 13A(1)(n) of the Sixth Directive." (Hoffmann C-144/00)
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Recognition procedure​
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- Member states permitted but not required to lay down formal recognition measures
"[41] Such recognition does not presuppose a formal recognition procedure and need not necessarily be derived from national tax law provisions (see, to that effect, judgment of 10 June 2010, CopyGene, C‑262/08, EU:C:2010:328, paragraph 61)." (I GmbH C-228/20)
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"[64] As regards the term other duly recognised establishments of a similar nature, Article 13A(1)(b) of the Sixth Directive does not specify the conditions and procedures for that recognition. It is thus, in principle, for the national law of each Member State to lay down the rules according to which such recognition may be granted to establishments which request it.
...
[67] In addition, no provision of the Sixth Directive requires that recognition be granted in accordance with a formal procedure or that it be provided for expressly in national tax provisions." ​(Dornier C-45/01)
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- For national courts to supervise recognition conditions laid down
"[69] It should be borne in mind in this context that, as regards Article 13A(1)(g) of the Sixth Directive, the Court has held that where a taxable person seeks the status of charitable organisation, it is for the national courts to examine whether the competent authorities have observed the limits on their discretion under that provision while applying Community principles, in particular the principle of equal treatment (Kügler, cited above, paragraph 56)." (Dornier C-45/01)
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- Recognition conditions relating to the matters laid down in the Directive tested against equal treatment (not fiscal neutrality)
"[74] In the case in the main proceedings, it is therefore for the national court to determine, in the light of all of those factors, whether the refusal to recognise Dornier for the purposes of the exemption provided for in Article 13A(1)(b) of the Sixth Directive gives rise to an infringement of the principle of equal treatment as compared to other operators providing the same treatment in comparable situations." (Dornier C-45/01)
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- Recognition conditions not relating to matters laid down in the Directive tested against fiscal neutrality as well
"[74] In the case in the main proceedings, it is therefore for the national court to determine, in the light of all of those factors, whether the refusal to recognise Dornier for the purposes of the exemption provided for in Article 13A(1)(b) of the Sixth Directive gives rise to an infringement of the principle of equal treatment as compared to other operators providing the same treatment in comparable situations." (Dornier C-45/01)
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- Where no recognition conditions laid down/incompatible conditions, for national court to determine
"[82] In the present case, it follows from the answer given to the second question that the national rules pertaining to recognition of an establishment for the purposes of the exemption provided for in Article 13A(1)(b) of the Sixth Directive contain a restriction incompatible with the terms of that provision. The taxable person may therefore rely directly, in the national court, on Article 13A(1)(b) of the Sixth Directive to contest the application of a rule of national law requiring that the treatment be provided under medical supervision. However, it also follows from the answer to the second question that, in order for it to obtain recognition as an other duly recognised establishment of a similar nature and thus to benefit from the exemption provided for in Article 13A(1)(b) of the Sixth Directive, the national court must determine, in the light of all the relevant factors, in particular the circumstances of the case in the main proceedings, whether the taxable person satisfies the conditions of application of that exemption." (Dornier C-45/01)
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Not permissible to imposed recognition conditions related to the subject-matter of the exemption
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- Medical exemption cannot be limited by reference to whether the medical care is supervised
"[51] Next, in so far as the national legislation makes the exemption of medical care such as that at issue in the main proceedings subject to those conditions, which it is for the national court to determine, it should be borne in mind that the Court has held previously that the condition requiring that the treatment be provided under medical supervision, in so far as it is intended to preclude the exemption from applying to treatment given under the sole responsibility of members of paramedical professions, goes beyond the limits of the discretion allowed to the Member States under Article 13A(1)(b) of the Sixth Directive. The term ‘medical care’ in that provision covers not only treatment provided directly by doctors or other health professionals under medical supervision, but also paramedical services given in hospitals under the sole responsibility of persons who are not doctors (Dornier, paragraph 70).
[52] It follows that, for the purposes of the exemption provided for in Article 13A(1)(b) of the Sixth Directive, a Member State may not validly make recognition of establishments governed by private law subject to a condition requiring that the tests carried out by those establishments be done under medical supervision (see, to that effect, Dornier, paragraphs 71 and 82)." (LUP C-106/05)
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Applying specific recognition conditions to some private bodies but not others ​
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- The purpose of the 'recognised as charitable' restriction is not to align such non-public bodies with public bodies
"[52] Accordingly, the principle of fiscal neutrality does not preclude, for example, the situation under Article 13A(1)(g) of the Sixth Directive, whereby, for the purposes of the exemption, it is unnecessary for bodies governed by public law to be recognised as ‘charitable’, but such recognition is required in the case of organisations other than bodies governed by public law." (Zimmermann C-174/11)
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- Equal treatment required of non-public bodies
"[53] As is apparent from paragraphs 42 and 52 above, in the context of the exemption provided for under Article 13(1)(g) of the Sixth Directive, it is not in relation to bodies governed by public law that the principle of fiscal neutrality requires equal treatment in terms of recognition as ‘charitable’, but in relation to all other organisations, each as compared with the others." (Zimmermann C-174/11)
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- Private law operators must each be subject to the same conditions for the purpose of recognition
"[63] In the implementation of the exemption laid down in Article 132(1)(b) of the VAT Directive, compliance with fiscal neutrality requires, inter alia, that all organisations other than those governed by public law should be placed on an equal footing for the purpose of their recognition for the supply of similar services (see, to that effect, judgment of 8 June 2006, L.u.P., C‑106/05, EU:C:2006:380, paragraph 50)." (I GmbH C-228/20)
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"[50] It may be stated at the outset that compliance with the principle of fiscal neutrality requires, first, that all of the categories of establishments governed by private law referred to in Article 13A(1)(b) of the Sixth Directive be subject to the same conditions for the purpose of their recognition for the provision of similar services. In the present case, therefore, it is for the national court to ascertain whether the national legislation complies with that requirement or whether, on the contrary, it restricts the application of the conditions in question to certain types of establishments whilst excluding others." ​(LUP C-106/05)
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- Not permissible to refuse to recognise on the basis that there is already sufficient supply capacity
[67] The referring court states, in that regard, as mentioned in paragraph 21 above, that the consequence of applying the national legislation at issue is that the exemption provided for in Article 132(1)(b) of the VAT Directive applies only if the services supplied by the private hospital in question meet specified needs under social security law. Thus, in practice, a private hospital would have no prospect of being included in the hospital plan for the Land in which it is located or of concluding care supply contracts with the statutory health insurance funds if enough hospital beds for a particular speciality are already available within the Land in question.
[68] As the Advocate General observed in points 111 and 112 of his Opinion, it follows from the information provided by the referring court that the providers of statutory accident insurance, the Land-level health insurance fund associations and substitute fund associations all enjoy a discretion as to whether to conclude an agreement with a hospital and that the Länder are not obliged to include in their hospital plan private non-university hospitals that carry on their activities under social conditions comparable with those applicable to bodies governed by public law.
[69] The exercise of such discretion depending on needs defined under social security law may, contrary to the principle of fiscal neutrality, result in similar private hospitals being treated differently as regards the exemption laid down in Article 132(1)(b) of the VAT Directive in respect of similar services supplied under social conditions comparable with those applicable to bodies governed by public law." (I GmbH C-228/20)
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- Not permissible to distinguish based on how costs of supplies are funded that only applies to some candidates for exemption
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"[63] In the light of all the foregoing considerations, the answer to the questions referred is that, under Article 13A(1)(g) of the Sixth Directive, interpreted in the light of the principle of fiscal neutrality, the VAT exemption for out-patient services supplied by commercial service-providers may not be made subject to a condition such as that at issue in the main proceedings, by virtue of which the costs relating to those services must, during the preceding calendar year, have been borne wholly or partly by the statutory social security or social welfare authorities in at least two thirds of cases, where that condition is not capable of ensuring equal treatment in relation to the recognition, for the purposes of that provision, of the ‘charitable’ nature of organisations other than bodies governed by public law." (Zimmermann C-174/11 - the 2/3 funding from social security condition did not apply to officially recognised voluntary welfare associations)
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Nature of the recognition conditions that may be imposed: general​
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- Not sufficient that body authorised to carry on the activity in question
"[55] However, if the national authorities are not to be deprived of the discretion which that provision confers upon them, the recognition of an establishment within the meaning of Article 132(1)(b) of the VAT Directive cannot be equated with the authorisation to carry out certain activities in accordance with national legislation (see, to that effect, judgment of 10 June 2010, CopyGene, C‑262/08, EU:C:2010:328, paragraph 75)." (I GmbH C-228/20)
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- Exemptions in Article 132 not inherently limited to public interest activities​
"[31] By its second question the referring court is asking, essentially, whether the heading, by itself, of Article 13A of the Sixth Directive, which refers to [e]xemptions for certain activities in the public interest, entails restrictions to the possibilities of exemption provided for by that provision, in particular if the services in question are provided primarily for commercial purposes.
...
[35] According to the United Kingdom Government, the heading of Article 13A of the Sixth Directive indicates that the exemptions provided for by that provision must be restricted to activities in the public interest. Therefore, Article 13A(1)(n) of the Sixth Directive is to be interpreted restrictively, in such a way that only cultural activities carried on in the public interest are exempted and not those carried on solely for profit.
...
[40] The reply to the second question must therefore be that the heading of Article 13A of the Sixth Directive does not, of itself, entail restrictions on the possibilities of exemption provided for by that provision." (Hoffmann C-144/00)
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But see
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"[50] In that regard, it should be noted, first of all, as regards the context of that provision, that the latter is contained in Chapter 2, headed ‘Exemptions for certain activities in the public interest’, of Title IX of that directive. That exemption thus covers establishments which pursue objectives in the public interest." (I GmbH C-228/20)
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- The body is being recognised (or not) as having the stated attribute (e.g. charitable)
"[33] Accordingly, where a taxable person challenges the recognition, or the absence of recognition, of an organisation as ‘charitable’ for the purposes of Article 13A(1)(g) of the Sixth Directive, it is for the national courts to examine whether the competent authorities have observed the limits of the discretion granted by that provision whilst applying the principles of EU law, including, in particular, the principle of equal treatment, which, in the field of VAT, takes the form of the principle of fiscal neutrality (see inter alia, to that effect, Kügler, paragraph 56; Kingscrest Associates and Montecello, paragraphs 52 and 54; and L.u.P., paragraph 48).
...
[52] Accordingly, the principle of fiscal neutrality does not preclude, for example, the situation under Article 13A(1)(g) of the Sixth Directive, whereby, for the purposes of the exemption, it is unnecessary for bodies governed by public law to be recognised as ‘charitable’, but such recognition is required in the case of organisations other than bodies governed by public law.
...
[53] As is apparent from paragraphs 42 and 52 above, in the context of the exemption provided for under Article 13(1)(g) of the Sixth Directive, it is not in relation to bodies governed by public law that the principle of fiscal neutrality requires equal treatment in terms of recognition as ‘charitable’, but in relation to all other organisations, each as compared with the others." (Zimmermann C-174/11)
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- Limiting exemption to establishments pursuing activities in line with the purpose of the provision
"[56] It follows that the recognition of an establishment that may be exempted from VAT under Article 132(1)(b) of the VAT Directive allows the Member States, first, to ensure that only establishments which pursue activities in line with the purposes of that provision qualify for such an exemption and, secondly, to make eligibility for that exemption subject to compliance with the conditions laid down in Article 133 of the VAT Directive, and cannot, therefore, be limited solely to the ‘other establishments’ referred to in Article 132(1)(b)." (I GmbH C-228/20)
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- Query whether conditions equivalent to those in Article 133 may be imposed as recognition conditions
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"[53] Lastly, it should be borne in mind that the first paragraph of Article 133 of the VAT Directive allows Member States to make the granting of the exemption provided for in Article 132(1)(b) of that directive subject to one or more of the conditions set out in that provision. Those conditions relate to the aims of those bodies, their management and the prices charged by them, and concern all the private bodies referred to in Article 132(1)(b).' (I GmbH C-228/20)
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"[38] First, the activities which are to be exempted from VAT, those which may be exempted by the Member States and those which may not, as well as the conditions to which the activities eligible for exemption may be made subject by the Member States, are specifically defined by the content of Article 13A of the Sixth Directive. Second, as is confirmed by paragraph 2(a) of that article, which authorises, but does not oblige, the Member States to restrict exemption to bodies other than public-law bodies which do not have a systematic profit-making aim, the commercial nature of an activity does not preclude it from being, in the context of Article 13A of the Sixth Directive, an activity in the public interest.
[39] The possible restrictions on the benefit of the exemptions provided for by Article 13A of the Sixth Directive may be imposed, as is pointed out at paragraphs 28 and 29 of this judgment, only in the context of the application of paragraph 2 of that provision." (Hoffmann C-144/00)
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But note that (m) does replicate the not for profit condition
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"[33] Although that distinction is not to be found in any of the other language versions of the Sixth Directive, it is borne out by the objective of the provisions contained in Article 13A thereof. As the Advocate General points out in paragraph 57 to 61 of his Opinion, it is not profits (bénéfices), in the sense of surpluses arising at the end of an accounting year, which preclude categorisation of an organisation as ‘non-profit-making, but profit (profit) in the sense of financial advantages for the organisation's members. Consequently, as the Commission also points out, the condition set out in the first indent of Article 13A(2)(a) essentially replicates the criterion of non-profit-making organisation as contained in Article 13A(1)(m)." (Kennemer Golf C-174/00)
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Medical exemption recognition conditions ​
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- Requirement for due recognition applies to all non-public bodies
"[48] In the present case, since, in order to qualify for the exemption, ‘other establishments’ must be ‘of a similar nature’ to ‘hospitals and centres for medical treatment or diagnosis’, the condition for the recognition of an establishment must be understood as applying to all the establishments mentioned in Article 132(1)(b) of the VAT Directive." (I GmbH C-228/20)
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- The exemption requires non public bodies to provide care "under social conditions comparable"
"(b) hospital and medical care and closely related activities undertaken
[i] by bodies governed by public law or,
[ii]under social conditions comparable with those applicable to bodies governed by public law, by
hospitals,
centres for medical treatment or diagnosis and
other duly recognised establishments of a similar nature;" (Article 132(1)(b)) (formatting added)
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"[37] In accordance with the wording of that provision, two cumulative conditions must be satisfied for hospital and medical care and closely related activities offered by an entity other than a body governed by public law to be eligible for exemption from VAT. The first condition relates to the services supplied and requires that they be undertaken under social conditions comparable with those applicable to bodies governed by public law (see, to that effect, judgment of 5 March 2020, Idealmed III, C‑211/18, EU:C:2020:168, paragraphs 20 and 21).
[38] The second condition relates to the status of the establishment supplying those services and requires the operator to be a hospital, a centre for medical treatment or diagnosis or another duly recognised establishment of a similar nature." (I GmbH C-228/20)
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- Covers duly recognised establishments pursuing social purposes
"[47] ... Whilst it is true that the Court in that case found that the exemption of supplies of goods effected in connection with the provision of medical care envisaged in Article 13A(1)(c) could not be justified under letter (b) of the same provision, that interpretation follows inter alia from the fact that the latter provision covers duly recognised establishments pursuing social purposes and provides expressly for exemption of activities which are closely linked to medical care; the same cannot be said of Article 13A(1)(c)." (Dornier C-45/01)
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The exemption requires non public bodies to provide care "under social conditions comparable"
"hospital and medical care and closely related activities undertaken by bodies governed by public law or, under social conditions comparable with those applicable to bodies governed by public law, by hospitals, centres for medical treatment or diagnosis and other duly recognised establishments of a similar nature;" (Article 132(1)(b))
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- Article 132 does not define precisely the aspects of the service that must be compared
"[73] In that regard, it should be borne in mind that Article 132(1)(b) of the VAT Directive does not define precisely the aspects of the healthcare services concerned that must be compared in order to assess whether they are provided under comparable social conditions and, consequently, whether that provision is applicable (see, to that effect, judgment of 5 March 2020, Idealmed III, C‑211/18, EU:C:2020:168, paragraph 24)." (I GmbH C-228/20)
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- The social conditions comparison relates to the services supplies
"[75] As regards, in the first place, the scope of the concept of ‘comparable social conditions’, it should be noted, as the Advocate General observed in point 89 of his Opinion, that it is clear from the very wording of Article 132(1)(b) of the VAT Directive that that condition relates to the services supplied by the establishment concerned." (I GmbH C-228/20)
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- Requirement is for similarity (need not be identical)
"[76] It also follows from the wording of that provision that, first, the conditions under which the services are supplied in a hospital must be, not identical, but similar to those under which the services are supplied in an establishment governed by public law and, secondly, those conditions must be of a social nature." (I GmbH C-228/20)
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- Must be a comparison of social conditions
"[76] It also follows from the wording of that provision that, first, the conditions under which the services are supplied in a hospital must be, not identical, but similar to those under which the services are supplied in an establishment governed by public law and, secondly, those conditions must be of a social nature." (I GmbH C-228/20)
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- Cost and quality are relevant factors
"[78]In the third place, as pointed out in paragraph 57 above, Article 132(1)(b) of the VAT Directive is intended, inter alia, to reduce the cost of medical care and to make that care more accessible to individuals, which also entails the accessibility of high-quality care.
[79] Therefore, in order to determine whether the services of private hospitals are provided under social conditions comparable with those applicable to bodies governed by public law, it will be for the referring court, first of all, to take into consideration the conditions, laid down by the applicable legislation, to which hospitals governed by public law are subject as regards the services supplied, and which are intended to achieve the objective of reducing the cost of medical care and making high-quality care more accessible to individuals, and which are appropriate and necessary for that purpose.
[80] Next, it follows from the objective of the exemption provided for in Article 132(1)(b) of the VAT Directive, as noted in paragraph 78 above, that the costs of the services supplied by private hospitals which remain payable by patients must be taken into account.
[81] In that regard, as the European Commission states, the question whether fixed-rate daily fees are calculated in a comparable way in a private hospital and in a hospital governed by public law may prove relevant. Similarly, it will be for the referring court to examine whether the services supplied by private hospitals are covered by the social security regime or under contracts concluded with public authorities of a Member State, so that the costs that remain payable by patients are at a level comparable to those borne by patients of public establishments." (I GmbH C-228/20)
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- May take into account public interest of activities, and funding through social security
"[61] As regards, secondly, the factors to be taken into account for the purpose of recognition of establishments that are eligible for the exemption from VAT, within the meaning of Article 132(1)(b) of the VAT Directive, it is for the national authorities, in accordance with EU law and subject to review by national courts, to take into consideration a number of factors, which include the public interest of the activities of the taxable person in question, the fact that other taxable persons carrying on the same activities already have similar recognition, and the fact that the costs of the services in question may be largely met by health insurance schemes or other social security bodies (judgment of 10 June 2010, CopyGene, C‑262/08, EU:C:2010:328, paragraph 65 and the case-law cited).
...
[74] In those circumstances, the Court has found that factors such as whether the services are in the public interest, and the fact that the services are covered by the social security scheme or are supplied under contracts concluded with public authorities of a Member State, at prices fixed by those contracts and whose costs are partially borne by the social security institutions of that Member State, are factors that may be taken into account (see, to that effect, judgments of 10 June 2010, CopyGene, C‑262/08, EU:C:2010:328, paragraphs 69 and 70, and of 5 March 2020, Idealmed III, C‑211/18, EU:C:2020:168, paragraph 32)." (I GmbH C-228/20)
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"[54] As to the second condition, it is also apparent from the case-law that, in order to determine whether establishments governed by private law may be recognised for the purpose of the application of the exemption provided for in Article 13A(1)(b) of the Sixth Directive, the national authorities may, in accordance with Community law and subject to review by the national courts, take into consideration, inter alia and in addition to the public interest of the activities of the taxable person in question and the fact that other taxable persons carrying on the same activities already have similar recognition, the fact that the costs incurred for the treatment in question may be largely met by health insurance schemes or other social security bodies (Dornier, paragraphs 72 and 73)." (LUP C-106/05)
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"[72] In paragraphs 57 and 58 of Kügler, cited above, the Court added that, in order to determine which organisations should be recognised as charitable within the meaning of Article 13A(1)(g) of the Sixth Directive, the national authorities should, in accordance with Community law and subject to review by the national courts, take a number of factors into consideration. Those factors include the public interest of the activities of the taxable person in question, the fact that other taxable persons carrying on the same activities already have similar recognition, and the fact that the costs incurred for the treatment in question may be largely met by health insurance schemes or other social security bodies.
[73] As correctly pointed out by the Advocate General in point 55 of her Opinion, those statements appear to apply equally to the interpretation of Article 13A(1)(b) of the Sixth Directive as regards recognition of the establishments referred to in that provision." (Dornier C-45/01)
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- Performance in terms of staff, premises etc may be relevant to cost and quality
"[82] Lastly, the private hospital’s performance in terms of staff, premises and equipment and the cost-efficiency of its management may be taken into consideration, in so far as hospitals governed by public law are subject to comparable management indicators and such indicators contribute to achieving the objective of reducing medical costs and making high-quality care more accessible to individuals, which is a matter for the referring court to determine." (I GmbH C-228/20)
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- Comparable social conditions aspect allows a laboratory that is of a similar nature to hospital not to be 'duly recognised'
"[35] That line of argument cannot be accepted. As the medical tests, in the light of their therapeutic purpose, come within the concept of ‘medical care’ as referred to in Article 13A(1)(b) of the Sixth Directive, a laboratory such as that at issue in the main proceedings must be regarded as being an establishment ‘of a similar nature’ as the ‘hospitals’ and the ‘centres for medical treatment or diagnosis’ within the meaning of that provision.
...
[54] Accordingly, in requiring, for the purpose of recognition as laboratories governed by private law for the application of that exemption, that at least 40% of the medical tests carried out by the laboratories concerned must be intended for persons insured by a social security authority, the Member State in question did not go beyond the limits of the discretion allowed to it by that provision." (LUP C-106/05 - LUP had not established that it met the 40% requirement (§11))
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- Permissible to distinguish based on how costs of supplies are funded that applies to all candidates for recognition
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​[53] As to the second condition, it is also apparent from the case-law that, in order to determine whether establishments governed by private law may be recognised for the purpose of the application of the exemption provided for in Article 13A(1)(b) of the Sixth Directive, the national authorities may, in accordance with Community law and subject to review by the national courts, take into consideration, inter alia and in addition to the public interest of the activities of the taxable person in question and the fact that other taxable persons carrying on the same activities already have similar recognition, the fact that the costs incurred for the treatment in question may be largely met by health insurance schemes or other social security bodies (Dornier, paragraphs 72 and 73).
[54] Accordingly, in requiring, for the purpose of recognition as laboratories governed by private law for the application of that exemption, that at least 40% of the medical tests carried out by the laboratories concerned must be intended for persons insured by a social security authority, the Member State in question did not go beyond the limits of the discretion allowed to it by that provision." (LUP C-106/05)
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- But contrary to equal treatment to distinguish based on whether social funding covers all or only part of cost
"[75] It is in this light that it is appropriate to take account of the fact that the social security authorities do not reimburse, or only partially reimburse, patients for the costs of psychotherapeutic treatment. If Dornier's situation is comparable in this respect to that of other operators providing the same treatment, the mere fact that the cost of that treatment is not fully covered by the social security authorities does not justify a difference in the treatment of providers for VAT purposes." (Dornier C-45/01)
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- Not permissible to refuse to recognise on the basis that there is already sufficient supply capacity
[67] The referring court states, in that regard, as mentioned in paragraph 21 above, that the consequence of applying the national legislation at issue is that the exemption provided for in Article 132(1)(b) of the VAT Directive applies only if the services supplied by the private hospital in question meet specified needs under social security law. Thus, in practice, a private hospital would have no prospect of being included in the hospital plan for the Land in which it is located or of concluding care supply contracts with the statutory health insurance funds if enough hospital beds for a particular speciality are already available within the Land in question.
[68] As the Advocate General observed in points 111 and 112 of his Opinion, it follows from the information provided by the referring court that the providers of statutory accident insurance, the Land-level health insurance fund associations and substitute fund associations all enjoy a discretion as to whether to conclude an agreement with a hospital and that the Länder are not obliged to include in their hospital plan private non-university hospitals that carry on their activities under social conditions comparable with those applicable to bodies governed by public law.
[69] The exercise of such discretion depending on needs defined under social security law may, contrary to the principle of fiscal neutrality, result in similar private hospitals being treated differently as regards the exemption laid down in Article 132(1)(b) of the VAT Directive in respect of similar services supplied under social conditions comparable with those applicable to bodies governed by public law." (I GmbH C-228/20)
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'Charitable' recognition conditions (now devoted to social wellbeing)
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- Relevant matters: public interest of activities, recognition of others, costs met by social security
"[72] In paragraphs 57 and 58 of Kügler, cited above, the Court added that, in order to determine which organisations should be recognised as charitable within the meaning of Article 13A(1)(g) of the Sixth Directive, the national authorities should, in accordance with Community law and subject to review by the national courts, take a number of factors into consideration. Those factors include the public interest of the activities of the taxable person in question, the fact that other taxable persons carrying on the same activities already have similar recognition, and the fact that the costs incurred for the treatment in question may be largely met by health insurance schemes or other social security bodies." (Dornier C-45/01)
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- Permissible to distinguish based on how costs of supplies are funded that applies to all candidates for recognition as charitable
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"[35] As regards, first, the two thirds threshold, it should be noted that, in accordance with the case‑law set out in paragraph 31 above, the fact that the costs of the services concerned may have been borne largely by statutory health insurance funds or by other social security bodies is an element which may be taken into account in determining the organisations which must be granted recognition for the purposes of Article 13A(1)(g) of the Sixth Directive." (Zimmermann C-174/11 - the 2/3 funding from social security condition did not apply to officially recognised voluntary welfare associations)
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- EU concept of charitable does not exclude profit-making suppliers
"[40] In those circumstances, in order not to deprive the first indent of Article 13A(2)(a) of the Sixth Directive of all purpose, it must necessarily be accepted that, where the Community legislature, as in Article 13A(1)(g) and (h), has not expressly made entitlement to the exemptions in question subject to the absence of a profit-making aim, the pursuit of such an aim cannot preclude entitlement to those exemptions (see, to that effect, Kennemer Golf, paragraph 34, and Hoffmann, paragraph 38).
...
[44] That conclusion is not undermined by the fact that the appellants in the main proceedings, in view of the fact that they pursue a profit-making aim, do not have charitable status under domestic law, in spite of the fact that the English version of Article 13A(1)(g) and (h) of the Sixth Directive reserves the exemptions thereunder for organisations recognised as ‘charitable’. As is clear from the reply to the first question, the concepts mentioned in the Sixth Directive are independent concepts of Community law and not concepts of domestic law." (Kingcrest Associates Ltd C-498/03)
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- Profit-making/non-profit making nature of supplier distinction would breach fiscal neutrality
"[58] Accordingly, national legislation may not, in implementing the exemption provided for under Article 13A(1)(g) of the Sixth Directive, lay down materially different conditions for profit-making entities, on the one hand, and non-profit making legal persons falling under Paragraph 4(18) of the UStG, on the other.
[59] It follows that Article 13A(1)(g) of the Sixth Directive, interpreted in the light of the principle of fiscal neutrality, precludes a threshold such as the two thirds threshold in so far as, in relation to supplies of goods or services which are essentially the same, that threshold is applied – for recognition as ‘charitable’ for the purposes of that provision – to some taxable persons governed by private law, but not to others." (Zimmermann C-174/11)
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"[41] ​As regards, secondly, the principle of fiscal neutrality, it must be remembered that that principle precludes, in particular, treating similar supplies of services, which are thus in competition with each other, differently for VAT purposes (see, to that effect, Case C-141/00 Kügler [2002] ECR I‑6833, paragraph 30, and Case C‑109/02 Commission v Germany [2003] ECR I‑12691, paragraph 20).
[42] Clearly, as the Advocate General observed, in essence, in paragraph 29 of his Opinion, that principle would not be observed if, where the national legislature has not made the exemption subject to the condition set out in the first indent of Article 13A(2)(a) of the Sixth Directive, the welfare services covered in Article 13A(1)(g) and (h) were treated differently for VAT purposes depending on whether the entities which provide them are profit-making or not." (Kingcrest Associates Ltd C-498/03)
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Education exemption recognition conditions​
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- Commercial nature does not preclude activity being exempt
"[26] Concerning the purpose of the exemption provided for in point (i) of Article 132(1) of the VAT Directive, it is apparent from that provision that that exemption, by treating the supply of educational services more favourably for the purposes of VAT, is intended to facilitate access to those services by avoiding the increased costs that would result if the services were subject to VAT (see, to that effect, Case C‑287/00 Commission v Germany [2002] ECR I‑5811, paragraph 47).
[27] In the light of that purpose, it must be observed that the commercial nature of an activity does not preclude it from being, in the context of point (i) of Article 132(1) of the VAT Directive, an activity in the general interest (see Case C‑144/00 Hoffmann [2003] ECR I‑2921, paragraph 38; and Case C‑498/03 Kingscrest Associates and Montecello [2005] ECR I‑4427, paragraph 31)." (MDDP C-319/12)
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- Private bodies must have similar objects (query whether this refers to educational objects)
"[35] Under point (i) of Article 132(1) of the VAT Directive, the supply of educational services referred to is, however, exempt only if those services are provided by educational bodies governed by public law or by other organisations recognised by the Member State concerned as having similar objects. It follows that other organisations, namely, private organisations, must fulfil the condition of pursuing objects similar to those of bodies governed by public law. It is thus clearly apparent from the wording of point (i) of Article 132(1) that it does not permit Member States to grant the supply of the educational services exemption to all private organisations providing such services, by including also those whose objects are not similar to those of bodies governed by public law.
[36] Therefore, an exemption, such as that at issue in the main proceedings, which applies generally to all supplies of educational services, whatever the aim pursued by the private organisations providing those services, is incompatible with point (i) of Article 132(1), as conceived by the European Union legislature." (MDDP C-319/12)
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- For member states to lay down the conditions or procedures for defining the similar objects
"[37] In so far as point (i) of Article 132(1) of the VAT Directive does not specify the conditions or procedures for defining those similar objects, it is, in principle, for the national law of each Member State to lay down the rules in accordance with which that definition may be granted to such organisations. The Member States have a discretion in that respect (see, to that effect, Kingscrest Associates and Montecello, paragraphs 49 and 51; and Zimmermann, paragraph 26).
[38] Furthermore, it is for the national courts to examine whether the Member States, in imposing such conditions, have observed the limits of their discretion in applying the principles of European Union law, in particular the principle of equal treatment, which, in the field of VAT, takes the form of the principle of fiscal neutrality (see, to that effect, Kingscrest Associates and Montecello, paragraph 52; and L.u.P., paragraph 48)." (MDDP C-319/12)
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- National court to compare objects of private body with those of bodies governed by public law providing educational services
"[54] As was pointed out by the Advocate General in points 70 and 71 of her Opinion, it is for the national court to determine whether the exemption of services supplied by an organisation such as MDDP, in accordance with point (i) of Article 132(1) of the VAT Directive, exceeds the discretion granted to the Polish legislature. It is for that court to examine the object and conditions of MDDP’s activity by comparing them with those of Polish bodies governed by public law providing educational services. It follows from the Court’s answer to Question 1 that the mere fact that an organisation such as MDDP pursues commercial objects is not sufficient to preclude its having objects similar to those of bodies governed by public law and that its services may therefore be exempted in accordance with that provision.
[55] If the national court were to find that the objects pursued by an organisation such as MDDP cannot be considered to be similar to those pursued by a body governed by public law, MDDP could rely on the fact that national law exempts, in infringement of point (i) of Article 132(1) of the VAT Directive, its professional educational and training services from VAT. In that case, its services would be subject to VAT and MDDP could then claim, to that extent, a right to deduct input VAT in accordance with Polish legislation." (MDDP C-319/12)
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- Permissible to limit exemption to entities having a partnership with an educational establishment, subject to equal treatment and fiscal neutrality
"[32] Furthermore, it is for the national courts to examine whether the Member States, in imposing such conditions, have observed the limits of their discretion in applying the principles of European Union law, in particular the principle of equal treatment, which, in the field of VAT, takes the form of the principle of fiscal neutrality (judgment of 28 November 2013, MDDP, C‑319/12, EU:C:2013:778, paragraph 38 and the case-law cited).
...
[34] It is apparent from the information submitted by the referring court that Happy Education has not concluded such a partnership and, therefore, does not have the recognition or authorisation required for that purpose under Romanian law.
[35] Consequently, it must be held that, subject to the examination referred to in paragraph 32 above, such an entity cannot be regarded as an organisation recognised as having similar objects to those of an educational body governed by public law, for the purposes of Article 132(1)(i) of Directive 2006/112, since it does not satisfy the conditions laid down for that purpose by the national authorities. That characterisation is not affected by the fact that the entity in question carries out educational activities in the public interest of the kind provided under the ‘School after school’ programme, or that that entity has obtained authorisation in the form of the attribution of the CAEN code 8559 – ‘Other education n.e.c.’, during the process of registering with the National Trade Register Office." (Happy Education C-612/20)
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ARTICLE 131​
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Conditions for the correct and straightforward application/prevention of abuse
"The exemptions provided for in Chapters 2 to 9 shall apply without prejudice to other Community provisions and in accordance with conditions which the Member States shall lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse." (Article 131)
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- Not to be used to narrow the subject-matter of the exemption
"[24] As the Court has already held, although the introductory sentence of Article 13A(1) of the Sixth Directive states that Member States are to lay down the conditions for exemptions in order to ensure the correct and straightforward application of the exemptions and to prevent any possible evasion, avoidance or abuse, those conditions cannot affect the definition of the subject-matter of the exemptions envisaged (Case C‑287/00 Commission v Germany [2002] ECR I‑5811, paragraph 50)." (Kingcrest Associates Ltd C-498/03)
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"[26] First, it should be observed that, according to settled case-law, although the introductory sentence of Article 13(A)(1) of the Sixth Directive states that Member States are to lay down the conditions for exemptions in order to ensure the correct and straightforward application of the exemptions and to prevent any possible evasion, avoidance or abuse, those conditions cannot affect the definition of the subject-matter of the exemptions envisaged (see, in particular, Case C-124/96 Commission v Spain [1998] ECR I-2501, paragraphs 11 and 12). From that point of view, the subjection to, or exemption from, VAT of a specific transaction cannot depend on its classification in national law." (Commission v. France C-76/99)
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- Cannot be used to impose a condition that would automatically rule out early stage activities
"[40] In consequence, it would be for the referring court, to the extent necessary, to assess whether, in situations where activities should, from their commencement, have been recognised as ‘charitable’ for the purposes of Article 13A(1)(g) of the Sixth Directive, in accordance with the case‑law set out in paragraph 31 above, the obligation to take account only of the preceding calendar year has as a consequence that, as regards the first calendar year – or even the first two calendar years – of those activities, recognition that the service provider concerned is ‘charitable’ for the purposes of that provision is automatically and inevitably ruled out.
[41] In so far as the obligation to take account only of the preceding calendar year were to have such an effect, it could not be justified on the basis of the introductory words of Article 13A(1) of the Sixth Directive." (Zimmermann C-174/11)
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ARTICLE 133​
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Optional additional conditions
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"Member States may make the granting to bodies other than those governed by public law of each exemption provided for in points (b), (g), (h), (i), (l), (m) and (n) of Article 132(1) subject in each individual case to one or more of the following conditions:
(a) the bodies in question must not systematically aim to make a profit, and any surpluses nevertheless arising must not be distributed, but must be assigned to the continuance or improvement of the services supplied;
(b) those bodies must be managed and administered on an essentially voluntary basis by persons who have no direct or indirect interest, either themselves or through intermediaries, in the results of the activities concerned;
(c) those bodies must charge prices which are approved by the public authorities or which do not exceed such approved prices or, in respect of those services not subject to approval, prices lower than those charged for similar services by commercial enterprises subject to VAT;
(d) the exemptions must not be likely to cause distortion of competition to the disadvantage of commercial enterprises subject to VAT.
Member States which, pursuant to Annex E of Directive 77/388/EEC, on 1 January 1989 applied VAT to the transactions referred to in Article 132(1)(m) and (n) may also apply the conditions provided for in point (d) of the first paragraph of this Article when the said supply of goods or services by bodies governed by public law is granted exemption." (Article 133)
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- Cannot selectively apply the 'not for profit' condition only to some candidates for exemption
"[56] However, there is nothing in the information placed before the Court to suggest that, through the condition at issue in the main proceedings, the Federal Republic of Germany has availed itself of that option. On the contrary, it appears that, for the purposes of the exemption provided for under Article 13A(1)(g) of the Sixth Directive, that condition contemplates precisely the recognition of profit-making commercial bodies as ‘charitable’.
[57] Moreover, applying the rules of interpretation set out in paragraph 22 above (see, inter alia, Case C‑473/08 Eulitz [2010] ECR I‑907, paragraph 42 and the case‑law cited), the Court has held, in relation to the concept of ‘organisations recognised as charitable by the Member State concerned’ as referred to in Article 13A(1)(g) of the Sixth Directive, that that concept is in principle sufficiently broad to encompass natural persons and private profit-making entities (see Case C‑216/97 Gregg [1999] ECR I‑4947, paragraph 17; Hoffmann, paragraph 24; Kingscrest Associates and Montecello, paragraphs 35 and 47; and Case C‑492/08 Commission v France [2010] ECR I‑5471, paragraphs 36 and 37).
[58] Accordingly, national legislation may not, in implementing the exemption provided for under Article 13A(1)(g) of the Sixth Directive, lay down materially different conditions for profit-making entities, on the one hand, and non-profit making legal persons falling under Paragraph 4(18) of the UStG, on the other."
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- Not systematically aiming to make profit refers to not providing financial advantages to members (can aim to generate surplus)
"[35] Consequently, the answer to be given to the third question must be that Article 13A(1)(m) of the Sixth Directive is to be interpreted as meaning that an organisation may be categorised as non-profit-making even if it systematically seeks to achieve surpluses which it then uses for the purposes of the provision of its services. The first part of the optional condition set out in the first indent of Article 13A(2)(a) of the Sixth Directive is to be interpreted in the same way." (Kennemer Golf C-174/00)
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ARTICLE 134​
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Mandatory limits for exemption for closely related supplies
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"The supply of goods or services shall not be granted exemption, as provided for in points (b), (g), (h), (i), (l), (m) and (n) of Article 132(1), in the following cases:
(a) where the supply is not essential to the transactions exempted;
(b) where the basic purpose of the supply is to obtain additional income for the body in question through transactions which are in direct competition with those of commercial enterprises subject to VAT." (Article 134)​​
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- Only applies to closely related supplies, not core exemption supplies
"[32] Furthermore, contrary to what is claimed by the Commission, Article 134 of the VAT Directive in no way excludes the possibility of applying the exemption provided for in point (i) of Article 132(1) of that directive to private organisations that provide educational services for commercial purposes. As the Advocate General pointed out in point 31 of her Opinion, Article 134 of the VAT Directive is applicable only to transactions closely related to the exempted educational services within the meaning of point (i) of Article 132(1) thereof, that is to say, not to transactions in the core area of those services (see, to that effect, Joined Cases C‑394/04 and C‑395/04 Ygeia [2005] ECR I‑10373, paragraph 26; and Case C‑415/04 Stichting Kinderopvang Enschede [2006] ECR I‑1385, paragraphs 22 and 25)." ​(MDDP C-319/12)
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