The cost-sharing VAT exemption is not for financial services, says EU Court


In brief

The Court of Justice of the European Union (CJEU, “the Court”) released its decisions on 21 September 2017 in three cases (Aviva, C-605/15, DNB BANKA, C-326/15 and Commission v Germany, C-616/15), relating to “independent group of persons (IGP)” (also referred to as the cost-sharing VAT exemption). In these three cases, the central question was whether this VAT exemption applies to the financial services and insurance sectors too or whether the application of the VAT exemption is limited to activities in the public interest.

In its judgments, the Court concluded that this exemption is limited to the public interest sector (hospital, social sector, etc.) as opposed to the other sectors such as insurance and the financial sectors.

These decisions will definitely hit players in the insurance and financial sectors currently using the cost-sharing VAT exemption. Only a change of the European VAT Directive would allow the use of cost-sharing exemption for financial and insurance players going forward.

Interestingly, the Court provided guidance on whether its judgements could have a retroactive effect as regards tax periods not definitively closed and stated that national Authorities should not reject the exemption for the past.

Announcement of the Belgian Tax Authorities

In the meantime, the Belgian Tax Authorities acknowledged the judgments cited above and are examining the possible consequences of those judgments on the Belgian VAT exemption for cost-sharing associations, as provided for in Article 44, §2bis of the Belgian VAT Code.

Belgian VAT legislation currently allows the application of the VAT exemption if the members are mainly VAT exempt or non-taxable persons, regardless of the specific sector.

An official position will follow later.

Practical implications

These decisions will have implications for players in the financial and insurance sectors currently applying the VAT exemption (on a Belgian or cross-border basis). Unfortunately, it is currently not possible to predict when an official position of the Belgian VAT Authorities will follow. From the judgments, we derive that there will be no retroactive effect. It also needs to be taken into account that other EU Member States will review their position as well following these decisions.

Therefore, it is important to measure the impact to your business now. We would be pleased to assist you in reviewing the impact of the cases and consider alternative option(s) that be most adequate to your unique circumstances.


For more information on this topic, please don’t hesitate to contact Lionel Wielemans, Manuel Van Der Veken or Inge Stuyver.