Provisional text

JUDGMENT OF THE GENERAL COURT (Second Chamber, sitting with five Judges)

10 June 2026 (*)

( Reference for a preliminary ruling – Common system of value added tax (VAT) – Taxable persons – VAT group – Article 11 of Directive 2006/112/EC – Exemptions for certain activities in the public interest – Article 132(1)(b) and (g) of Directive 2006/112 – Services of a VAT group provided by a member of that group which does not meet all the conditions for exemption )

In Case T‑444/25 [Cavert], (i)

REQUEST for a preliminary ruling under Article 267 TFEU from the Hoge Raad der Nederlanden (Supreme Court of the Netherlands), made by decision of 28 March 2025, received at the Court on 23 June 2025, in the proceedings

Staatssecretaris van Finaciën

v

Fiscale Eenheid Stichting X c.s.,

THE GENERAL COURT (Second Chamber, sitting with five Judges),

composed of N. Półtorak, President, G. Hesse, G. Steinfatt, D. Petrlík and I. Dimitrakopoulos (Rapporteur), Judges,

Advocate General: M. Brkan,

Registrar: V. Di Bucci,

having regard to the transmission of the request for a preliminary ruling to the General Court by the Court of Justice on 9 July 2025, pursuant to the third paragraph of Article 50b of the Statute of the Court of Justice of the European Union,

having regard to the fact that the case concerns the area referred to in point (a) of the first paragraph of Article 50b of the Statute of the Court of Justice of the European Union and the fact that there is no independent question relating to interpretation within the meaning of the second paragraph of Article 50b of that statute,

having regard to the written part of the procedure,

after considering the observations submitted on behalf of:

–        Fiscale Eenheid Stichting X c.s., by F. Manzoni and F. Soetens, acting as Agents,

–        the Netherlands Government, by P. Huurnink and J. Langer, acting as Agents,

–        the European Commission, by M. Herold and W. Roels, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1        This request for a preliminary ruling concerns the interpretation of Article 11, Article 132(1)(b) and (g) and Article 133(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1) (‘the VAT Directive’).

2        The request has been made in proceedings between Eenheid Stichting X c.s. (‘Tax entity X’) and the Staatssecretaris van Financiën (State Secretary for Finance, Netherlands) concerning the imposition of value added tax (VAT) on that entity for services carried out by one of its members during the period of 1 April to 30 June 2016.

 Legal framework

 European Union law

3        Article 11 of the VAT Directive provides:

‘After consulting the advisory committee on value added tax …, each Member State may regard as a single taxable person any persons established in the territory of that Member State who, while legally independent, are closely bound to one another by financial, economic and organisational links.

A Member State exercising the option provided for in the first paragraph, may adopt any measures needed to prevent tax evasion or avoidance through the use of this provision.’

4        Article 132(1) of the VAT Directive, which is contained in Chapter 2, headed ‘Exemptions for certain activities in the public interest’, of Title IX of that directive, provides:

‘Member States shall exempt the following transactions:

…

(b)      hospital and medical care and closely related activities undertaken by bodies governed by public law or, under social conditions comparable with those applicable to bodies governed by public law, by hospitals, centres for medical treatment or diagnosis and other duly recognised establishments of a similar nature;

…

(g)      the supply of services and of goods closely linked to welfare and social security work, including those supplied by old people’s homes, by bodies governed by public law or by other bodies recognised by the Member State concerned as being devoted to social wellbeing;

…’

5        Article 133 of the VAT Directive provides:

‘Member States may make the granting to bodies other than those governed by public law of each exemption provided for in points (b), (g), (h), (i), (l), (m) and (n) of Article 132(1) subject in each individual case to one or more of the following conditions:

(a)      the bodies in question must not systematically aim to make a profit, and any surpluses nevertheless arising must not be distributed, but must be assigned to the continuance or improvement of the services supplied;

…’

 Netherlands law

6        Article 7(4) of the Wet op de omzetbelasting 1968 (Law on turnover tax 1968) of 28 June 1968 (Stb. 1968, No 329), in the version applicable to the dispute in the main proceedings (‘the Law on Turnover Tax’), implements the possibility, offered to Member States by Article 11 of the VAT Directive, to consider a grouping of persons who are legally independent but closely bound to one another by financial, economic and organisational links as a single taxable person (VAT group).

7        Article 11(1), introductory part and points (c) and (f) of the Law on Turnover Tax, which transposes Article 132(1)(b) and (g) of the VAT Directive, is worded as follows:

‘Subject to conditions to be laid down by public administrative regulation, the following shall be exempt from tax:

…

c.      care provided to persons in residential care and all acts closely related to that care, including the provision of meals, drinks, medication and dressings to those persons;

…

f.      supplies of welfare and cultural goods and services designated by public administrative regulation provided the operator is not a for-profit operator and there is no distortion of competition in relation to for-profit operators’.

8        Under Article 7(1) of, and Annex B, letter (b), point (13), to, the Uitvoeringsbesluit omzetbelasting 1968 (Implementing Decree on turnover tax 1968) (Stb. 1968, No 423), in the version applicable to the main proceedings, the supply of goods and services of a social nature made, as such, by hospitals, outpatient clinics, psychiatric institutions and similar institutions, in so far as the supply of services cannot already be classified under Article 11(1)(c) of the Law on Turnover Tax, is also exempt from turnover tax.

 The dispute in the main proceedings and the questions referred for a preliminary ruling

9        Tax entity X is a VAT group made up of two foundations and three limited liability companies governed by Netherlands law. Those five legal persons are each involved with various aspects of care for people with intellectual disabilities who are admitted to residential care homes or who stay in another form of accommodation.

10      Only one of the two foundations belonging to Tax entity X is duly recognised as a body which admits persons to a facility for the purpose of care, under Article 11(1)(c) of the Law on Turnover Tax. That foundation is, moreover, the only legal person belonging to Tax entity X which is recognised as a body devoted to social wellbeing, for the purposes of the exemption of the supplies of goods and services of a social nature pursuant to Article 11(1)(f) of that law.

11      One of the three limited liability companies belonging to Tax entity X (‘company Y’) provides services consisting of day and night supervision, remotely from the care location and using various technical means, of persons with intellectual disabilities who reside in a care institution or other form of accommodation where care is provided.

12      Tax entity X declared and paid the turnover tax due on the services provided by company Y to third parties not belonging to that tax entity, for the period from 1 April to 30 June 2016. Tax entity X then lodged an objection against the amount which it had paid, arguing that the services provided by company Y to third parties were exempt from the turnover tax pursuant to the provisions of Article 11(1)(c) and (f) of the Law on Turnover Tax.

13      The Dutch tax authorities rejected that claim on the ground that company Y is neither a recognised body which admits persons to a facility for the purpose of care nor a body devoted to social wellbeing, and therefore did not satisfy all of the conditions for eligibility for the exemptions provided for by those provisions. Tax entity X brought an action before the rechtbank Zeeland-West-Brabant (District Court, Zeeland-West-Brabant, Netherlands) and subsequently brought an appeal before the Gerechtshof’s-Hertogenbosch (Court of Appeal, ’s-Hertogenbosch, Netherlands). That latter court upheld the appeal brought by Tax entity X, taking the view, in essence, that, since company Y was part of a VAT group, those conditions for exemption had to be assessed at the level of that group, and not at the level of each of its members, and that it was sufficient for a single member of that group to be recognised as a body which admits persons to a facility for the purpose of care and as a body devoted to social wellbeing for that group to be recognised as such in its entirety.

14      The State Secretary for Finance brought an appeal on a point of law before the Hoge Raad der Nederlanden (Supreme Court of the Netherlands), which is the referring court, claiming, inter alia, contrary to what the appeal court had ruled, that the question of whether the exemptions provided for in Article 11(1)(c) and (f) of the Law on Turnover Tax were applicable should not be assessed at the level of the tax entity, but in relation to the specific legal person providing the services in question.

15      The referring court considers that the appeal before it raises the question of how national provisions on exemption which transpose Article 132(1)(b) and (g) of the VAT Directive should be applied where the taxable person is a VAT group for the purposes of Article 11 of that directive, one of whose members satisfies the conditions for exemption set out in those provisions, where the services for which the exemption is sought are carried out for third parties by a member of the group which does not itself satisfy those conditions. It considers that the answer to that question cannot be inferred beyond a reasonable doubt from the VAT Directive and the case-law of the Court of Justice. In particular, that case-law does not make it possible to determine whether the treatment of a VAT group as a single taxable person also applies as regards an exemption with subject-based conditions, with the result that it would be sufficient for one member of the group to meet those conditions in order for the group to be exempted. It notes that such an interpretation might not be consistent with the nature of the exemptions provided for in Article 132(1)(b) and (g) of the VAT Directive, which are reserved for legal persons having duly recognised qualities. It also asks, in the event that such an interpretation was to be accepted, whether, where the Member State has made use of the option set out in Article 133, introductory part and point (a), of the VAT Directive to make those exemptions conditional on the absence of a profit motive, it would be sufficient for that condition to be satisfied by a single member of the VAT group or whether it would also apply to the member of the group which provides the services.

16      In those circumstances, the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘(1)      Must Article 11 of the [VAT Directive], read in conjunction with Article 132(1)(b) and (g) of the [VAT Directive], be interpreted as meaning that the exemptions referred to therein apply only in so far as the supplies of the VAT group referred to in those provisions are made to third parties for consideration by a legally independent member of the VAT group which, considered individually, meets all the conditions for the application of those exemptions?

(2)      If the answer to question 1 is in the negative, is it sufficient for the applicability of Article 132(1)(b) and (g) and Article 133, introductory part and point (a)[,] of the [VAT Directive] in respect of all supplies referred to in those provisions made by the VAT group to third parties for consideration that only one legally independent member of the VAT group satisfies all the conditions for the application of those exemption provisions?’

 Consideration of the questions referred

 The first question

17      By its first question, the referring court asks, in essence, whether Article 11 of the VAT Directive, read in conjunction with Article 132(1)(b) and (g) of that directive, must be interpreted as meaning that a VAT group formed on the basis of Article 11 may rely on the exemptions referred to in Article 132(1)(b) and (g) of that directive only where the supplies of services in question are provided to third parties by a member of that group which itself satisfies all the conditions for the application of those exemptions, including those requiring that the supplier, where it is not a body governed by public law, be a medical care institution duly recognised by the Member State concerned and a body recognised by that State as being devoted to social wellbeing.

18      In order to answer that question, as a preliminary point, it must be borne in mind that the first paragraph of Article 11 of the VAT Directive permits each Member State to regard several persons as a single taxable person if they are established in the territory of that Member State and if, although they are legally independent, they are closely bound to one another by financial, economic and organisational links.

19      As regards the objectives pursued by Article 11 of the VAT Directive, by that provision the EU legislature intended, either in the interests of simplifying administration or with a view to combating abuses such as the splitting-up of one undertaking among several taxable persons so that each might benefit from a special VAT scheme, to ensure that Member States would not be obliged to treat as taxable persons those whose ‘independence’ is purely a legal technicality (see judgment of 15 April 2021, Finanzamt für Körperschaften Berlin, C‑868/19, not published, EU:C:2021:285, paragraph 35 and the case-law cited).

20      In addition, the effect of implementing the scheme established in Article 11 of the VAT Directive is that national legislation adopted on the basis of that provision allows entities which are closely bound to one another by financial, economic and organisational links no longer to be treated as separate taxable persons for the purposes of VAT but to be treated as a single taxable person and that, where that provision is implemented by a Member State, the closely linked entity or entities within the meaning of that provision cannot be treated as a taxable person or persons within the meaning of Article 9(1) of that directive (see, to that effect, judgment of 11 July 2024, Finanzamt T II, C‑184/23, EU:C:2024:599, paragraph 38 and the case-law cited).

21      It follows that a supplier belonging to a VAT group cannot, when the Member State has implemented such a scheme, be treated, individually, as a separate taxable person from the taxable person constituted by the VAT group (see judgment of 11 July 2024, Finanzamt T II, C‑184/23, EU:C:2024:599, paragraph 40).

22      It also follows that the supplies of services made by a third party to a member of a VAT group must be considered, for VAT purposes, to have been made not to that member but to the actual VAT group to which that member belongs (see judgment of 18 November 2020, Kaplan International Colleges UK, C‑77/19, EU:C:2020:934, paragraph 46 and the case-law cited).

23      The same also applies to supplies of services to a third party by a member of a VAT group which must be regarded, for VAT purposes, as having been made by the VAT group to which the supplier belongs.

24      However, the fact that a person belonging to a VAT group cannot be considered, individually, as a separate taxable person from the taxable person constituted by the VAT group does not preclude the possibility of assessing whether that person satisfies the conditions concerning its status as an economic operator carrying out the services referred to in Article 132(1)(b) and (g) of the VAT Directive, where the VAT group relies on the exemptions provided for by those provisions. The question whether such a person may be regarded as a separate taxable person from the taxable person constituted by the VAT group is different from the question of the conditions under which such a group may rely on those exemptions.

25      The wording of Article 11 of the VAT Directive does not provide any indication as to the answer to be given to that question. However, in that regard, it should be noted that the objectives of the scheme provided for in Article 11 are simplifying administration and combating abusive conduct (see paragraph 19 above). Those objectives do not support extending to a VAT group the benefit of the exemptions at issue, which would not be applicable were it not for the existence of the VAT group, as regards services provided to third parties by one of its members which does not fulfil the necessary conditions.

26      In addition, as regards Article 132 of the VAT Directive, it is apparent from settled case-law that the terms used to specify the VAT exemptions referred to in that provision, in particular those concerning the status or identity of the economic agent performing the services covered by the exemption, are to be interpreted strictly, since those exemptions constitute exceptions to the general principle that all services supplied for consideration by a taxable person are subject to that tax (see judgment of 7 April 2022, I (VAT exemption for hospital services), C‑228/20, EU:C:2022:275, paragraphs 34 and 35 and the case-law cited).

27      Nevertheless, the interpretation of those terms must be consistent with the objectives pursued by those exemptions and comply with the requirements of the principle of fiscal neutrality inherent in the common system of VAT. Accordingly, the requirement of strict interpretation does not mean that the terms used to specify the exemptions referred to in Article 132 should be construed in such a way as to deprive the exemptions of their intended effects and make them almost inapplicable in practice (see, to that effect, judgment of 18 November 2020, Kaplan International Colleges UK, C‑77/19, EU:C:2020:934, paragraph 37 and the case-law cited).

28      It is clear from the wording of Article 132(1)(b) of the VAT Directive that Member States are to exempt hospital and medical care and closely related activities undertaken by bodies governed by public law or, ‘under social conditions comparable with those applicable to bodies governed by public law, by hospitals, centres for medical treatment or diagnosis and other duly recognised establishments of a similar nature’.

29      In accordance with the wording of that provision, two cumulative conditions must be satisfied for hospital and medical care and closely related activities offered by an entity other than a body governed by public law to be eligible for exemption from VAT. The first condition relates to the services supplied and requires that they be undertaken under social conditions comparable with those applicable to bodies governed by public law. The second condition relates to the status of the establishment supplying those services and requires the operator to be a hospital, a centre for medical treatment or diagnosis or another duly recognised establishment of a similar nature (see judgment of 7 April 2022, I (VAT exemption for hospital services), C‑228/20, EU:C:2022:275, paragraphs 37 and 38 and the case-law cited).

30      Under Article 132(1)(g) of the VAT Directive, Member States exempt the supply of services and of goods closely linked to welfare and social security work, including those supplied by old people’s homes, by bodies governed by public law or by other bodies recognised by the Member State concerned as being devoted to social wellbeing.

31      In that regard, it follows from the wording of Article 132(1)(g) of the VAT Directive that the benefit of an exemption referred to in that provision is also subject to two cumulative conditions, namely, first, that concerning the nature of the services provided, which must be closely linked to welfare and social security work, and, secondly, that concerning the supplier of the services, which must be a body governed by public law or another body recognised as being devoted to social wellbeing by the Member State concerned (judgment of 11 May 2023, MOMTRADE RUSE, C‑620/21, EU:C:2023:395, paragraph 43).

32      In those circumstances, it must be observed that it follows from the wording of Article 132(1)(b) and (g) of the VAT Directive that Member States are to exempt certain transactions carried out by duly recognised ‘establishments’ or ‘bodies’ from VAT. As the European Commission and the Netherlands Government correctly point out, those provisions make no mention of the concept of ‘taxable person’ referred to in Article 11 of that directive.

33      It follows that a literal interpretation of the provisions of Article 132(1)(b) and (g) of the VAT Directive, which must be interpreted strictly (see paragraph 26 above), supports the conclusion that the conditions relating to the status of the supplier of the relevant services should be assessed by taking into account the person who supplies them as a member of the VAT group. In that regard, it should be emphasised that such an interpretation does not risk rendering the exemptions in question almost inapplicable in practice, in respect of services provided by a VAT group (see paragraph 27 above).

34      In addition, in accordance with settled case-law, in interpreting a provision of EU law, it is necessary to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part (judgment of 17 November 1983, Merck, 292/82, EU:C:1983:335, paragraph 12; see, also, judgment of 18 November 2020, Kaplan International Colleges UK, C‑77/19, EU:C:2020:934, paragraph 39 and the case-law cited).

35      As regards the context of which Article 132(1)(b) and (g) of the VAT Directive forms part, that provision is to be found in Chapter 2, entitled ‘Exemptions for certain activities in the public interest’, of Title IX of that directive, which contains Articles 132 to 134 of that directive. The heading of that chapter indicates that it is the public interest nature of the transactions referred to in that chapter that is the aspect considered by the EU legislature as being the decisive factor for the purpose of exempting transactions from VAT (judgment of 11 May 2023, MOMTRADE RUSE, C‑620/21, EU:C:2023:395, paragraph 46).

36      In addition, it should be borne in mind that the first paragraph of Article 133 of the VAT Directive allows Member States to make the granting of the exemption provided for in Article 132(1)(b) or (g) of that directive subject to one or more of the conditions mentioned in Article 133(a) to (d). Those conditions relate, inter alia, to the aims of the private establishments and bodies referred to in Article 132(1)(b) and (g) of that directive, to their management and to the prices charged by them.

37      In that context, the recognition of an establishment or body that may be exempted from VAT under Article 132(1)(b) or (g) of the VAT Directive allows the Member States, first, to ensure that only establishments and bodies which pursue activities in line with the purposes of those provisions qualify for such an exemption and, secondly, to make eligibility for that exemption subject to compliance with the conditions laid down in Article 133 of the VAT Directive (see, to that effect, judgment of 7 April 2022, I (VAT exemption for hospital services), C‑228/20, EU:C:2022:275, paragraph 56).

38      The context of Article 132(1)(b) and (g) of the VAT Directive therefore contains elements capable of excluding from the benefit of the exemptions at issue services provided by a person, as a member of a VAT group, which does not itself satisfy all the conditions for the application of those exemptions, including those requiring that the supplier be a medical care institution duly recognised by the Member State concerned and a body recognised by that Member State as being devoted to social wellbeing. The objectives referred to in paragraph 37 above, of the recognition of an establishment or a body under Article 132(1)(b) or (g) of the VAT Directive, would be jeopardised if a VAT group could rely on the exemptions referred to therein where the relevant supplies of services are provided to third parties by a member of that group which is not duly recognised by the Member State concerned, even where another member of that group enjoys such recognition.

39      As regards the aim of Article 132(1)(b) and (g) of the VAT Directive, it should be noted that the purpose of those provisions, which consists in exempting from VAT certain activities in the public interest, carried out in the healthcare, welfare or social security sector, with a view to facilitating access to the supply of the relevant goods and services by avoiding the increased costs that would result if they were subject to VAT (see, to that effect, judgment of 5 March 2020, Idealmed III, C‑211/18, EU:C:2020:168, paragraph 25 and the case-law cited).

40      The public interest objective pursued by those provisions is intrinsically linked to the conditions for exemption which they lay down, relating the status of the establishment or body providing the services in question. In that regard, the recognition of an establishment or body eligible for exemption from VAT, under Article 132(1)(b) or (g) of the VAT Directive, allows the Member States to ensure that only the establishments and bodies which pursue activities corresponding to the aims of each of those provisions benefit from such an exemption (see paragraph 37 above). Since the conditions for exemption are precisely formulated, an interpretation of those provisions which extends their scope to services supplied by establishments or bodies belonging to a VAT group, which do not themselves fulfil those conditions, would be incompatible with the objective of those provisions (see, by analogy, judgment of 18 November 2020, Kaplan International Colleges UK, C‑77/19, EU:C:2020:934, paragraph 49 and the case-law cited).

41      Such an interpretation would not be consistent with the principle of fiscal neutrality, which precludes, inter alia, operators carrying out the same activities from being treated differently as far as the levying of VAT is concerned (judgment of 7 September 1999, Gregg,  C‑216/97, EU:C:1999:390, paragraph 20; see, also, judgment of 7 April 2022, I (VAT exemption for hospital services), C‑228/20, EU:C:2022:275, paragraphs 57 to 59 and the case-law cited). As the Commission and the Netherlands Government correctly point out, an interpretation of the provisions of Article 132(1)(b) or (g) of the VAT Directive which would result in the services provided by a company, as a member of a VAT group, being exempted from VAT, whereas those same services being carried out by a different operator, as a taxable person who does not belong to a VAT group, would not be exempted from VAT because that operator does not satisfy the conditions requiring that it be a medical care institution duly recognised by the Member State concerned or a body recognised by that Member State as being devoted to social wellbeing, would entail a different and unjustified treatment with regard to liability to VAT.

42      Consequently, Article 132(1)(b) and (g) of the VAT Directive, read in conjunction with Article 11 of that directive, must be interpreted as meaning that a VAT group formed on the basis of Article 11 may rely on the exemptions provided for in Article 132(1)(b) and (g) of that directive only where the supplies of services in question are provided to third parties by a member of that group which itself satisfies all the conditions for the application of those exemptions, including those requiring that the supplier, where it is not a body governed by public law, be a medical care institution duly recognised by the Member State concerned and a body recognised by that State as being devoted to social wellbeing.

 The second question

43      Given the answer to the first question, there is no need to answer the second question.

 Costs

44      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the General Court, other than the costs of those parties, are not recoverable.

On those grounds,

THE GENERAL COURT (Second Chamber, sitting with five Judges)

hereby rules:

Article 132(1)(b) and (g) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in conjunction with Article 11 of that directive,

must be interpreted as meaning that a VAT group formed on the basis of Article 11 may rely on the exemptions provided for in Article 132(1)(b) and (g) of that directive only where the supplies of services in question are provided to third parties by a member of that group which itself satisfies all the conditions for the application of those exemptions, including those requiring that the supplier, where it is not a body governed by public law, be a medical care institution duly recognised by the Member State concerned and a body recognised by that State as being devoted to social wellbeing.

Delivered in open court in Luxembourg on 10 June 2026.

[Signatures]

*      Language of the case: Dutch.

i      The name of the present case is a fictitious name. It does not correspond to the real name of any party to the proceedings.