5 April 2015

Germany has historically limited the application of the VAT exemption for cost sharing groups to the medical and healthcare sectors, denying the benefit to the financial services sector. The European Commission commenced infringement proceedings against Germany as far back as 2011, but now the decision has been taken to refer the case to the Court of Justice of the European Communities (CJEU).

There are many conditions which apply to cost sharing groups, but these do not include a need to belong to a particular sector of business. Other member states do limit the application of the exemption on grounds that it would distort competition, but it appears that Germany has been unsuccessful in persuading the EC that this is the reason for their limitation.