ECJ Judgement: Supplies of services to members and non-members from the VAT point of view | News Flash

Infohos concluded a cooperation agreement with the independent company IHC – Group NV to jointly develop innovative software. Infohos did not register as a taxable person for VAT purposes because it was of the opinion that it is not obliged to do so, and it provides tax exempted services.

After the tax audit, the Belgian Tax Authorities concluded that services supplied between Infohos and IHC – Group NV should be subject to VAT. Moreover, subject to VAT should be also transactions provided to members of the Infohos association and so the association was not eligible to apply an exemption from tax of services supplied to their members.

It is important to note that above mentioned provision of the Directive was transposed into Belgian law with an amendment which says that such activities are exempted from tax only in case of their consideration as supply of services exclusively to their own members.

Question of exclusivity of the supply of services to members

The question that the ECJ dealt with is whether the respective provision of the Directive must be interpreted as allowing the EU Member States to implement such exclusivity condition for exemption from tax, through which the independent group of people which supplies services to non-members too, becomes fully taxable person for VAT purposes also in connection to services supplied to their members.

Judgment of ECJ

Considering that services which this case concerns directly contribute to carry out the activities of public interest and considering a context and what the aim of this Directive provision is, the ECJ decided that even in case if the independent group of people, like Infohos is, supplies services also to subjects who are not the members, it does not affect the fact that it supplies services to own members which are exempted from tax.