Dutch Supreme Court refers preliminary questions to the Court of Justice of the EU on application of VAT exemptions by a Dutch VAT Fiscal Unity
On March 28, 2025, the Dutch Supreme Court referred preliminary questions to the Court of Justice of the European Union (CJEU) regarding the applicability of subject-specific conditions for the VAT exemption related to hospital and medical care services as well as supplies related to social security work.
The interested party is a VAT Fiscal Unity (consisting of two foundations and three limited liability companies) that renders medical and social security work to customers in the Netherlands. According to the Dutch tax authorities, the conditions for applying these VAT exemptions should be fulfilled by the (legally independent) member of the VAT Fiscal Unity that is actually rendering these services to customers against consideration. The interested party argues that application of the VAT exemption only requires that one member of the VAT Fiscal Unity meets these conditions.
The Dutch Supreme Court has referred the following two questions to the CJEU:
- Are the VAT exemptions included in article 132(1)(b) and (g) of the EU VAT Directive only applicable if the services are provided by a legally independent member of the VAT Fiscal Unity that individually meets all the conditions for exemption?
- If question 1 is answered in the negative, is it sufficient for application of the VAT exemptions in article 132(1)(b) and (g) of the EU VAT Directive to all services rendered by the VAT Fiscal Unity if only one legally independent member of the VAT Fiscal Unity meets the conditions of the VAT exemption?
Key takeaway
The outcome of these preliminary questions may affect businesses in the Netherlands with a VAT Fiscal Unity rendering services that currently benefit from VAT exemptions. Our recommendation for businesses is to review their current structure and assess whether these legal proceedings may have any adverse implications.
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