The General Court of the European Union’s judgment in case T-444/25, handed down on June 10 2026, provides an important clarification on the interaction between VAT groups and certain exemptions applicable to activities of public interest. Although the case concerns healthcare and social assistance services in the Netherlands, its importance goes beyond that specific sector and country.
The judgment confirms that the existence of a VAT group does not allow the personal characteristics or administrative recognitions held by only one of its members to be automatically extended to all the others.
The starting point: a VAT group with members of different nature
The dispute concerned a Dutch VAT group made up of several entities involved in the care of persons. Within the group, only one of the entities had been recognised as entitled to apply certain exemptions connected with social or healthcare assistance. However, the services at issue were supplied to third parties by another entity within the group, a company that did not individually hold that recognition.
The question was whether, within a VAT group, the exemption conditions must be met by the group as a whole or by the specific entity that actually supplies the service.
The group argued that, since there was a single taxable person for VAT purposes, it was sufficient for one of its members to meet the conditions for the exemption in order for the exemption to apply to the services supplied by the group. The Dutch tax authorities took the opposite view.
A VAT group does not remove all internal differences
Article 11 of the VAT Directive allows EU member states to treat several legally independent persons as a single taxable person where they are closely bound to one another by financial, economic, and organisational links.
However, the judgment introduces an essential nuance. The fact that the group is treated as a single taxable person does not mean that all the specific characteristics of each of its members disappear. In particular, they do not disappear where the application of an exemption depends precisely on the status, recognition, or quality of the operator that carries out the transaction.
The group may be the single taxable person, but this does not mean that all its members automatically inherit the administrative recognitions or specific qualities held by only one of them.
Exemptions in the public interest and personal requirements
The judgment focuses on the exemptions provided for in Article 132(1)(b) and (g) of the VAT Directive. These provisions refer, respectively, to certain healthcare services and to services directly connected with social welfare and social security. In both cases, the directive requires the supplier to be a public body or an establishment, entity, or organisation recognised by the relevant member state.
For the General Court, exemptions must be interpreted strictly, especially where they refer to the identity or status of the operator supplying the service. If a non-recognised entity were allowed to apply the exemption merely because another member of the group is recognised, the creation of a VAT group could become a way of extending exemptions to entities that, if considered individually, would not be entitled to apply them.
A conclusion with practical relevance
The General Court concludes that a VAT group may rely on these exemptions only where the services supplied to third parties are performed by a member of the group that, considered individually, meets all the conditions required for the exemption. This includes the status of a duly recognised healthcare establishment or of an organisation whose social character has been recognised by the member state.
This conclusion seems reasonable and avoids an outcome that would be difficult to reconcile with the principle of neutrality. If a company that does not belong to a group cannot apply an exemption because it lacks the necessary recognition, it does not seem justified that the same company could benefit from the exemption simply because it belongs to a VAT group together with another recognised entity.
However, the conclusion is not entirely free from tension. On the one hand, it is consistent with the purpose and strict interpretation of the exemptions. On the other hand, it slightly qualifies the idea that a VAT group must be treated as a single taxable person for VAT purposes. In practice, the court looks at the individual characteristics of the member that actually performs the service, despite the fact that this member belongs to a VAT group that, it should be recalled, is treated as a single taxable person.
From a practical perspective, the judgment requires a careful review of group structures carrying out exempt or partially exempt activities. It is not sufficient to identify the group as a single taxable person. It is necessary to analyse:
Which entity actually supplies the service to third parties;
What recognition that entity has;
What conditions the applicable exemption requires; and
Whether those conditions are met by the specific operator performing the service.
The message of the judgment is clear: a VAT group creates a single taxable person, but it does not automatically turn all its members into recognised, qualified, or authorised entities for the purposes of exemptions that the VAT Directive reserves for specific operators.
In the field of exemptions, the identity of the supplier still matters, even within a VAT group.
