When it comes to VAT
When multiple individual companies meet the conditions for a VAT fiscal unity, they are considered as one entrepreneur (solely for VAT purposes). This means, among other things, that no VAT needs to be charged on internal transactions and that a single joint VAT return is filed.
Seemingly a simple legal fiction, from which practice can greatly benefit. Nevertheless, there is considerable discussion about the application and operation of the VAT fiscal unity. A new and ‘logical’ debate concerns the application of the VAT exemption for medical care within a VAT fiscal unity.
A group of five collaborating healthcare institutions (a VAT fiscal unity), including a foundation and a private limited company (BV), provides care to individuals with intellectual disabilities. The foundation meets the requirements for applying the VAT exemption for medical care. These are ‘subject-related’ conditions. The BV provides 24-hour monitoring services to other healthcare organizations, such as camera surveillance, personal alarms, and emergency calls. These services are essential for the safety of clients in care institutions. The BV does not meet the ‘subject-related’ conditions and therefore, as an individual company, cannot apply the exemption for medical care. Given that both parties are part of a VAT fiscal unity, the question arises whether this fiscal unity as a whole can apply the exemption for medical care. After all, the VAT fiscal unity is considered by legal fiction to be one business.
The case is apparently so complex that the Supreme Court cannot decide on it itself. This is due to the struggle with the legal fiction of the fiscal unity, under which there is only one entrepreneur for VAT, and the strict requirements for applying the exemption for healthcare activities, which are aimed at the individual care provider (the ‘subject-related’ conditions). In short, does the legal fiction of the fiscal unity take precedence over the ‘subject-related’ conditions for the exemption (or vice versa)?
This contradiction has led the Supreme Court to refer the question to the EU Court of Justice (preliminary questions). The EU Court of Justice is expected to rule on the matter early next year.
If you have any questions about this topic or if you would like to discuss the topic further, please do not hesitate to contact us at info@vatpartners.com
14-09-2025 - Tax authorities in Member States are increasingly encountering incidents of fraud and non-payment of VAT, which may arise from issues such as liquidity constraints. As a result, there has been a clear increase in the number of VAT liability cases over the past decade, as well as in the number of VAT fraud cases.
Read more07-09-2025 - VAT and Transfer Pricing. At first glance, two subjects that seem unrelated. This has also been the approach taken in practice for decades. However, a discussion on the correlation between these two topics has been emerging for some time. The key question is: do adjustments based on Transfer Pricing rules have an impact on VAT?
Read more04-09-2025 - VAT and Transfer Pricing. At first glance, two subjects that seem unrelated. This has also been the approach taken in practice for decades. However, a discussion on the correlation between these two topics has been emerging for some time. The key question is: do adjustments based on Transfer Pricing rules have an impact on VAT?
Read more06-08-2025 - If the supplier has agreed an intra-Community supply with the buyer, but the buyer decides to transport the goods to a country outside the EU instead of to another Member State, the 0% VAT rate can still be applied. In that case, the 0% VAT rate intended for export transactions applies.
Read more