Flashback on ECJ Cases – C-407/07 (Stichting Centraal Begeleidingsorgaan) – Exemption Services supplied by independent groups

On December 11, 2008, the ECJ issued its decision in the case C-407/07 (Stichting Centraal Begeleidingsorgaan voor de Intercollegiale Toetsing).

Context: Sixth VAT Directive – Article 13A(1)(f) – Exemptions – Conditions – Services supplied by independent groups – Services supplied to one or several members of the group

Article in the EU VAT Directive

Article 13A(1)(f) of the Sixth VAT Directive (Article 132(1)(f) of the EU VAT Directive 2006/112/EC).

Article 132 (Exemptions for certain activities in the public interest)
1. Member States shall exempt the following transactions:
(f) the supply of services by independent groups of persons, who are carrying on an activity which is exempt from VAT or in relation to which they are not taxable persons, for the purpose of rendering their members the services directly necessary for the exercise of that activity, where those groups merely claim from their members exact reimbursement of their share of the joint expenses, provided that such exemption is not likely to cause distortion of competition;

Facts

The Stichting is a group of hospitals and other establishments in the health sector, including in particular the Orde van Medisch Specialisten (Medical Specialists’ Order), the Koninklijke Nederlandse Maatschappij tot Bevordering van de Geneeskunst (Netherlands Royal Society for the Promotion of the Practice of Healthcare), the Nationale Ziekenhuisraad (National Hospitals Board), the Vereniging van Nederlandse Ziekenfondsen (Union of Netherlands Sickness Insurance Funds), the Kontaktorgaan Landelijke Organisaties van Ziektekostenverzekeraars (Sickness Insurance Organisations’ Consultative Body) and the Nederlandse Vereniging voor Ziekenhuisdirecteuren (Netherlands Association of Hospital Directors).
The order for reference explains that the Stichting supplies for consideration to its members, whose activities are exempt from or are not subject to value added tax, services in the field of healthcare, in particular services related to quality standards and to defining and promoting a policy of quality in the healthcare sector.
Some of the services supplied to member hospitals by the Stichting are financed under the Law on the scales of charges for healthcare (Wet tarieven gezondheidszorg) of 20 November 1980 (Stb. 1980, No 646). Those services are exempt from VAT under Article 11(1)(u) of the 1968 Law on turnover tax (Wet op de Omzetbelasting 1968), which transposes Article 13A(1)(f) of the Sixth Directive.
The Stichting supplies other services to some of its members (hospitals and other institutions and persons) for which it is paid separately and the recipients of those services are invoiced individually.
A VAT adjustment was imposed on the Stichting in respect of those services for the period 1 January 1994 to 31 December 1998, and the inspector to whom a complaint was made decided to uphold that adjustment on the ground that the services concerned were not exempt from VAT.
The Stichting appealed against that decision to the Gerechtshof te Amsterdam which, by judgment of 1 June 2004, annulled the decision and reduced the adjustment to NLG 182 460. It held nevertheless that the Stichting had drawn up separate invoices for the services at issue in the main proceedings and that the corresponding payments did not cover joint expenses, within the meaning of Article 11(1)(u) of the 1968 Law on turnover tax. No exemption from VAT could therefore be granted.
The Stichting lodged an appeal in cassation to the Hoge Raad der Nederlanden, which states that it is not disputed that the services at issue in the main proceedings are directly necessary for the exercise of the exempt activities of the members of that group and that there is no distortion of competition.
The referring court notes that if the services at issue in the main proceedings are indeed services within the meaning of the Sixth Directive, and if the Stichting claims payment for those services that does not exceed the actual costs, the question then arises whether the sums the members of that group are invoiced correspond to those members’ share of the joint expenses within the meaning of Article 13A(1)(f) of the Sixth Directive.

Questions

Must Article 13.A(1)(f) of the Sixth Directive ¹ be construed as covering also services supplied by groups coming within the scope of that provision to their members which are directly necessary for the exercise of those members’ exempted activities or activities for which they are not subject to tax and by way of payment for which no more is invoiced than represents the costs incurred in respect of those services, if those services are supplied only to one or more members?

AG Opinion

Article 13A(1)(f) of the Sixth VAT Directive covers services supplied to their members by groups coming within its scope, even if those services are supplied to only one or more members, provided that the remaining conditions laid down in the provision are satisfied.

Decision

Article 13A(1)(f) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment must be interpreted as meaning that, provided the other conditions in that provision are met, services supplied to their members by independent groups are covered by the exemption contained in that provision, even if those services are supplied only to one or several of those members.

Summary

Article 13A(1)(f) of the Sixth Directive must be interpreted as meaning that, provided that the other conditions laid down in that provision are fulfilled, the provision of services by an independent group to its members for the purposes of that provision exemption provided for, even if these services are provided for the benefit of one or some of those members.

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