The case concerned a binding answer as to whether the questioner could be considered a taxable person covered by section 3, subsection of the VAT Act. 1, in his capacity as a supplier of forensic services for remuneration. The National Tax Court noted that in order to be covered by the exemption in the VAT System Directive, Article 13, subsection 1, paragraph 1, two cumulative conditions had to be met. Firstly, it had to be a public law body’s exercise of business, and secondly, the exercise had to take place in the capacity of a public authority. The court further noted that the university was a state-funded independent institution whose task was to conduct research and provide research-based education up to the highest international level within its fields of study. The minister could lay down detailed rules for universities or parts thereof, who carried out special tasks, or where special circumstances warranted it. This authorization was used when issuing the current executive order no. 1764 of 25 September 2009 on forensic medicine institutes at A University, X University and B University. The three universities each operated an institute of forensic medicine under the university’s faculty of health sciences, and the institutes followed the rules that applied to the university, unless otherwise stipulated in the executive order. An institute of forensic medicine was tasked within the field of forensic medicine to provide education, to conduct research and to carry out work for the judiciary, etc. special tasks which were assigned to the institute, cf. § 2, subsection 1. The university had to ensure that the institute of forensic medicine was at all times able to carry out the special tasks for the judiciary, etc. at a level so that the professional competence was not called into question, cf. § 2, subsection 2. Together with the other universities, the university had entered into a cooperation and financial agreement with the National Police regarding the provision of forensic services. In view of this, the court found that the university was a body governed by public law and that it was engaged in the provision of forensic services in the capacity of a public authority. The university was thus not a taxable person in accordance with section 3, subsection of the VAT Act. 1. As regards the second question, whether the university was a taxable person as a result of the fact that the forensic services were provided in competition with other business enterprises, the court noted, among other things, that given that the university was a body governed by public law, and that the activity carried out with the provision of forensic medical services took place in the capacity of a public authority, this activity was not carried out under the same legal conditions as other private traders. An exemption from tax liability would therefore not lead to a significant distortion of competition, as the services were not provided in competition with other private traders. The court also noted that the cooperation and financial agreements between the university, the other universities and the National Police had to be considered as an underlying filling in and regulation of the task that had been assigned to the universities. Regardless of the termination clause in the cooperation agreement between the university, the other universities and the National Police, the court found that it had not been justified, that the exemption from tax liability could lead to a real distortion of competition of some importance. The National Tax Court thus confirmed the Tax Council’s answer to the questions asked.
Source: skat.dk
