Cost Sharing Groups - what do the recent CJEU decisions tell us?

For universities and most other bodies operating in the public interest, the short answer to that question is 'not much', despite the Court of Justice of the European Union (CJEU) releasing three decisions relating to the Cost Sharing Exemption (CSE) last week.

We did learn that the Cost Sharing Exemption (CSE) cannot be applied to organisations whose activities are exempt from VAT under Article 135 of the Principal VAT Directive, which is a blow to the insurance and financial services sectors. However, given that the CJEU pronounced that the CSE only applies to activities which are exempt under Article 132 ('certain activities in the public interest') and the cases related to organisations operating in the insurance and financial services sectors, the court saw no need to answer any of the questions actually referred by the national courts in two of the cases (three questions in the Aviva case and six questions in the DNB Banka case). Although the Article 132 vs. Article 135 question was an important point to obtain clarity on, there were many other important points contained within the questions referred to the court over which we don't have much more clarity now.

Some of the questions had been dealt with in the AG's opinions in these cases, particularly the question over whether Cost Sharing Groups (CSGs) can operate with members in different countries. As was pointed out on a useful Deloitte webinar about these decisions on Monday, the AG's opinions do form part of the court decision, so unless the court specifically contradicts the AG's opinion then it should still be taken into account. However, because Advocate General Kokott determined that cross-border CSGs could not operate because of distortion of competition and the court said in the decision in EC v Germany (which did not relate to a cross-border CSG) that distortion of competition should be determined on a case-by-case basis, is that part of the AG's opinion still relevant?

Questions also remain around the UK's threshold test, as the CJEU's decision in the decision in the Luxembourg case, released earlier this year, determined that a threshold test could not be used.

Whether HMRC will issue a full response to these decisions making changes to UK law and guidance or whether they will wait to review their options with Brexit also remains to be seen.

The Deloitte webinar examines these, and more, questions raised (or simply not answered!) in these CJEU decisions, and the replay can be accessed here.