VAT treatment of groups of persons formed in the financial and insurance sectors

In these three jugdments, dated September 21st, 2017, the CJEU stated that the VAT exemption provided for in article 261 of the FTC could not apply to insurance and financial activities.

The CJEU indeed relied on a strict and literal interpretation of the EU VAT Directive, considering that this provision only concerns groups of persons whose members perform certain activities in the public interest, on the grounds that it is provided for in the second chapter of the EU VAT Directive relating to “exemptions for certain activities in the public interest”.

In practice, the Court specified that Member States cannot neither challenge this exemption for tax periods which are not closed yet nor for the past, in accordance with the principles of legal certainty and non-retroactivity.

Considering this radical standpoint, the French Authorities could, for the future, work on the implementation of a VAT group which could represent an alternative and lasting solution when, at the EU level, the adoption of a Directive including the challenged exemption might be considered.

CJEU, September 21th 2017 :