For a long time, the issue of taxation of public-law legal entities remained a taboo subject, particularly with regard to VAT.<\/p>\n\n
Indeed, while some public institutions\u2014which are clearly entrusted with a public service mission\u2014operate as de facto extensions of the government and are exempt from VAT, many organizations that serve the government find themselves in much murkier tax waters.<\/p>\n\n
And EU case law has established criteria for the application of VAT that go well beyond the legal form of these entities or the types of revenue they collect. Thus, an entity organized under private law\u2014such as a nonprofit association\u2014that is funded by \u201cearmarked\u201d payments on invoices will operate outside the scope of VAT. Conversely, a public interest group that receives VAT-exempt subsidies may in fact operate within the scope of VAT, sometimes without even realizing it. <\/p>\n\n
And without asking anyone for anything.<\/p>\n\n
Of course, these organizations may consult with the tax authorities as part of an advance ruling procedure, sometimes through their overseeing ministry.<\/p>\n\n
However, many organizations that receive grants or other revenue from their \u201cclients\u201d\u2014whether private or public\u2014without VAT do not wish to clarify their situation for fear of having to renegotiate the budget allocations granted to them.<\/p>\n\n
But what, exactly, are the criteria set forth in the relevant legislation (Article 13 of Council Directive 2006\/112\/EC on VAT, dated November 28, 2006, and Article 256 B of the General Tax Code)<\/em> and interpreted by the vast body of EU and subsequently national case law (indeed, the CJEU leaves it to national courts to define certain concepts such as \u201cpowers of public authority\u201d or what constitutes \u201cdistortions of competition\u201d)<\/em> to determine whether the revenue of a public body can be excluded from the scope of VAT?<\/p>\n\n An opinion of the Council of State dated April 12, 2019 (Opinion CE 12-4-2019 No. 427540 FR 31\/19 inf. 7, p. 9)<\/em> has fortunately come to the aid of public-law entities by clarifying several concepts, so that today the process is less fraught with risk than it was before.<\/p>\n\n You need to ask yourself the right questions in the right order\u2014follow this guide:<\/p>\n\n Now that the criteria for VAT liability have been clarified, public entities would be well advised to have them reviewed by their boards\u2014or even by the tax authorities\u2014by presenting their situation in a precise and well-reasoned manner.<\/p>\n","protected":false},"excerpt":{"rendered":" For a long time, the issue of taxation of public-law legal entities remained a taboo subject, particularly with regard to VAT. Indeed, while some public institutions\u2014which are clearly entrusted with a public service mission\u2014operate as de facto extensions of the government and are exempt from VAT, many organizations that serve the government find themselves in […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rs_blank_template":"","rs_page_bg_color":"","slide_template_v7":"","footnotes":""},"categories":[93],"tags":[],"class_list":["post-20273","post","type-post","status-publish","format-standard","hentry","category-corporate-taxation"],"yoast_head":"\n