On 4 May 2017, the ECJ7 held that Luxembourg’s VAT cost sharing exemption (CSE) was not compliant with EU law, in a decision that could have ramifications for the UK’s CSE.
The CSE, broadly, provides for an exemption for VAT on services provided within groups whose members make exempt (or non-business) supplies provided certain conditions are met. The Luxembourg CSE rules deem a group to carry on exempt/non-business activities provided no more than 30% of the group’s annual turnover relates to taxable activities. The ECJ has held that this contravenes EU law, which could have ramifications for the UK’s CSE rules which has a similar, albeit less generous, threshold of 15%.
The decision can be viewed here.