In her opinions in the cases DNB Banka (C-326/15) and Aviva (C-605/15), the CJEU's Advocate General (AG) provides guidance on the scope of the VAT cost sharing exemption.

Under the cost sharing exemption, the supply of services by a cost sharing group to its VAT exempt or non taxable members is VAT exempt if certain conditions are met. The purpose of the VAT exemption is to avoid that certain businesses incur irrecoverable VAT when it is necessary for them to cooperate with other entities to outsource certain activities. For example, hospitals that centrally outsource their maintenance activities.

The AG takes the position that the cost sharing exemption should be interpreted strictly as in her view it only covers certain exempt services, namely those in the public interest. This means that e.g. financial- and insurance services cannot fall under the exemption.

The AG further concludes that the cost sharing exemption does not apply in cross-border situations and is also not applicable in the event of a mandatory cost uplift based on direct taxation. If a consideration is paid higher than the mere costs for the supply of services the exemption does not apply.

Further, the AG is of the view that it must be assumed that the cost sharing exemption do not give rise to a distortion of competition, unless there is a abuse situation. The distortion criterion must be interpreted restrictively. The AG is of the opinion that member states do not have any regulatory discretion re this criteria. If the AG's view is followed, the Dutch decision of the State Secretary with a predetermined list of services that are excluded from the cost sharing exemption because they lead to distortion of completion could be inconsistent with the VAT directive.

Although an AG's opinion is not binding on the Court of Justice of the European Union (CJEU), it will have profound consequences for the scope of the cost sharing exemption if the CJEU decides in line with the AG's view.