The Court of Justice of the EU (CJEU) has released its judgments in the Latvian case of DNB Banka (C-326/15), the Polish case of Aviva (C-605/15) and in infringement proceedings brought by the European Commission v Germany (C-616/15). All three cases consider the operation of the cost sharing exemption (CSE).

The CJEU has held that the CSE can only be used by organisations which provide VAT exempt services listed in law as being in the ‘public interest’. This list includes education, health and welfare services, for example, but specifically excludes financial services, betting and gaming and real estate services. The CJEU reached its conclusions based on where the exemption is actually listed in the law. In its view, had the drafters intended the CSE to be available to all sectors, it would not have included it as part of a list of services in the public interest and would, instead, have listed it elsewhere.

While the CSE was only introduced into UK law in 2012 and it has not been extensively implemented in the UK, these judgments will have a significant impact in a number of large EU markets.

You can read CTG technical adviser Graham Elliott’s previous commentary on these cases here.