Jurisdiction(s):
United Kingdom

CJEU clarifies EU VAT grouping: intra‑group supplies are outside the scope of VAT even without input deduction rights; tax‑loss concerns irrelevant (Finanzamt T v S, 11 July 2024)

Published on: 04 October 2024

Published by a LexisNexis Tax expert

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Article summary

Finanzamt T v S Case C‑184/23

What are the practical implications of the case?

In earlier CJEU rulings, it had been implied that intra‑group supplies of services within a VAT group might attract VAT. This judgment clarifies that approach is mistaken, as members of a VAT group are treated as a single taxable person for VAT purposes. Consequently, VAT‑chargeable services cannot be made to participants within the same VAT group. Accordingly, internal charges within the group fall outside the scope of VAT. The CJEU’s clarification dispels the ambiguity created by its prior case law on this specific point. The ruling is expected to serve as a significant line of argument for tax administrations and impacted businesses across EU Member States. It should also be observed that the Court of Justice’s conclusion aligns with the recent Opinion of A‑G Rantons.

What was the background?

The applicant is a foundation responsible for a university faculty of medicine and, in that role, renders taxable patient care services. It also carries out non‑taxable activities in its capacity as a public authority in teaching, which is not treated as taxable for VAT purposes. Those teaching functions therefore sit outside the VAT system under this framework in practice...

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