Opinion of the Advocate General — ECLI:EU:C:2022:60
Date: 2022-01-27
Language of the case: German
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Germany

Summary C-269/20 — 1 
Case C-269/20 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
18 June 2020 
Referring court: 
Bundesfinanzhof (Germany) 
Date of the decision to refer: 
7 May 2020 
Defendant and appellant on a point of law: 
Finanzamt T 
Applicant and respondent on a point of law: 
S 
  
Subject matter of the main proceedings 
Turnover tax — Second subparagraph of Article 4(4) of Directive 77/388 — 
Authorisation of the Member States to treat as a single taxable person persons 
established in the territory of the country who, while legally independent, are 
closely bound to one another by financial, economic and organisational links — 
Article 6(2)(b) of Directive 77/388 — Pursuit of an activity carried on in an 
official capacity in addition to an economic activity 
Subject matter and legal basis of the reference for a preliminary ruling 
Interpretation of EU law, Article 267 TFEU 
Questions referred for a preliminary ruling 
1. Is the authorisation granted to Member States in the second subparagraph of 
Article 4(4) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the 
harmonisation of the laws of the Member States relating to turnover taxes to treat 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-269/20 
 
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as a single taxable person persons established in their territory who, while legally 
independent, are closely bound to one another by financial, economic and 
organisational links to be exercised in such a way that: 
a) treatment as a single taxable person is effected through one of those persons, 
who is the taxable person for all of the transactions performed by those persons; or 
in such a way that: 
b) treatment as a single taxable person must of necessity — and thus, in 
addition, under sufferance of substantial tax losses — lead to a VAT group 
separate from the persons closely bound to one another, which constitutes a 
fictitious entity to be set up specifically for VAT purposes? 
2. If the correct answer to the first question is (a): does it follow from the case-
law of the Court of Justice of the European Union concerning non-business 
purposes within the meaning of Article 6(2) of Sixth Council Directive 
77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member 
States relating to turnover taxes (judgment of the Court of Justice of the European 
Union of 12 February 2009 in VNLTO — C-515/07, EU:C:2009:88) that, in the 
case of a taxable person who, 
a) on the one hand, pursues an economic activity and, in so doing, provides 
services for consideration within the meaning of Article 2(1) of Sixth Council 
Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the 
Member States relating to turnover taxes, and 
b) on the other hand, pursues at the same time an activity which is incumbent 
upon him in the exercise of public authority (an activity he carries on in an official 
capacity) and in respect of which he is not considered to be a taxable person, in 
accordance with Article 4(5) of Sixth Council Directive 77/388/EEC of 17 May 
1977 on the harmonisation of the laws of the Member States relating to turnover 
taxes,  
a service falling within the sphere of his economic activity which he provides free 
of charge for a purpose falling within the sphere of the activity he carries on in an 
official capacity is not subject to tax, in accordance with Article 6(2)(b) of Sixth 
Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws 
of the Member States relating to turnover taxes? 
Provisions of EU law relied on 
Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the 
laws of the Member States relating to turnover taxes — Common system of value 
added tax: uniform basis of assessment, in particular the second subparagraph of 
Article 4(4) and Article 6(2) 
FINANZAMT T 
 
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Directive 2006/112/EC of 28 November 2006 on the common system of value 
added tax, Article 11 
Provisions of national law relied on 
Umsatzsteuergesetz (Law on Turnover Tax) (UStG), in particular Paragraph 2(2), 
point 2, and Paragraph 3(9a)  
Abgabenordnung (Tax Code) (AO), first sentence of Paragraph 73 
Brief presentation of the facts and the procedure 
1 The applicant is a foundation governed by public law and the sponsor of a 
university which operates, inter alia, a school of medicine. It is a taxable person 
and provides services for consideration (in the form of patient care). At the same 
time, in its capacity as a legal person governed by public law, it performs tasks in 
an official capacity (the teaching of students) in respect of which it is not 
considered to be a taxable person. 
2 The applicant is the ‘Organträgerin’ (tax group parent), within the meaning of 
Paragraph 2(2), point 2, of the UStG, of U-GmbH. U-GmbH provided, inter alia, 
cleaning services for the applicant. It provided those services across the complex 
of buildings comprising the university school of medicine, that is to say both on 
premises devoted to patient care (patients’ rooms, corridors and operating 
theatres) and thus to be classified as falling within the applicant’s economic 
sphere of activity, in which it operates as a taxable person, and on premises falling 
within the applicant’s official sphere of activity, that is to say premises used for 
student teaching (lecture rooms and laboratories), for the purposes of which it is 
not considered to be a taxable person. 
3 Following an external audit, the Finanzamt (Tax Office) formed the view that the 
applicant’s operations constituted a single undertaking. In that connection, the 
Finanzamt regarded the cleaning services which U-GmbH provides within the 
[applicant’s] official sphere of activity as supplies effected within the 
‘Organschaft’ (tax group relationship) that exists between the applicant and U-
GmbH. In the opinion of the Finanzamt, the cleaning services form part of a non-
business activity and constitute a benefit in kind within the meaning of 
Paragraph 3(9a), point 2, of the UStG (Article 6(2)(b) of Directive 77/388). On the 
basis of the proportion of surfaces cleaned for the applicant operating within its 
official sphere, the Finanzamt calculated the turnover tax due to be higher by 
EUR 841.12. The objection raised against that calculation was unsuccessful. 
4 The Finanzgericht (Finance Court) upheld the action [contesting that objection]. It 
held that there is in this case an ‘Organschaft’ (tax group relationship) which leads 
to the consolidation of the applicant as ‘Organträgerin’ parent and U-GmbH as 
‘Organgesellschaft’ (subsidiary) into a single undertaking. That tax group 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-269/20 
 
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relationship extends to the applicant’s official sphere of activity too. The 
conditions governing the existence of a benefit in kind within the meaning of 
Paragraph 3(9a), point 2, of the UStG, however, are not met. It is that judgment 
which the defendant is challenging by the appeal on a point of law which it has 
brought before the referring court.  
Brief presentation of the grounds of the reference 
The first question 
Statutory rules of national law 
5 Paragraph 2(2), point 2, of the UStG transposes the second subparagraph of 
Article 4(4) of Directive 77/388 into national law and provides that a legal person 
(the ‘Organgesellschaft’) (tax group subsidiary) which, from the point of view of 
the financial, economic and organisational relationships that exist between them, 
is integrated into the undertaking of another person (the ‘Organträger’) (tax group 
parent) does not carry on its economic activity independently. In accordance with 
Paragraph 2(2), point 2, of the UStG, based on the second subparagraph of 
Article 4(4) of Directive 77/388, transactions between the tax group subsidiary 
and the tax group parent are regarded as being performed within a single taxable 
person (third sentence of Paragraph 2(2), point 2, of the UStG). These so-called 
internal transactions do not fall within the scope of turnover tax. The cleaning 
services provided by U-GmbH to the applicant in the case at issue constitute such 
internal transactions. The first sentence of Paragraph 73 of the AO provides 
that the tax group subsidiary is to assume liability for the taxes which are payable 
by the tax group parent by virtue of the latter’s status as taxable person. 
Points of uncertainty as to the interpretation of EU law that require clarification 
6 The referring court takes the view in principle that the first question referred is to 
be answered in accordance with option (a). There is some uncertainty as to the 
correct interpretation of EU law, however, inasmuch as — in the light in particular 
of the judgment of 17 September 2014, Skandia America Corp. (USA), filial 
Sverige (C-7/13, EU:C:2014:2225, paragraph 28), concerning a ‘VAT group’ — it 
falls to be clarified whether the provisions of the Directive allow a Member State 
to confer the status of taxable person on a member of the VAT group (the 
‘Organträger’ (tax group parent)) rather than on the VAT group (‘Organkreis’ 
(group treated as a single entity for tax purposes)). The referring court has already 
referred a question to the Court of Justice for a preliminary ruling on this point 
(Case C-141/20). 
FINANZAMT T 
 
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Wording and purpose of the second subparagraph of Article 4(4) of Directive 
77/388 
7 The treatment as a single taxable person required by the wording of the second 
subparagraph of Article 4(4) of Directive 77/388 is achieved through 
consolidation through one of the persons closely bound to one another. This is 
borne out by, inter alia, the purpose of simplifying administration that lies behind 
that provision, as is apparent from the case-law of the Court of Justice (judgment 
of 25 April 2013, Commission v Sweden, C-480/10, EU:C:2013:263, 
paragraph 37). [German] national law simplifies the application of VAT law by 
providing, in the third sentence of Paragraph 2(2), point 2, of the UStG, for a 
number of persons to be treated as a single taxable person and by thus 
concentrating the levying of tax on one of those persons who is a taxable person 
anyway. 
Answer to the first question referred on the basis of option (b) 
8 If the first question referred is to be answered on the basis of option (b), there is 
no ‘Organschaft’ (tax group relationship) between the applicant as 
‘Organträgerin’ (tax group parent) and U-GmbH as ‘Organgesellschaft’ (tax group 
subsidiary) and the application of Article 6(2)(b) of Directive 77/388 in the case at 
issue is unnecessary from the outset. In the absence of a tax group relationship, U-
GmbH would have to be regarded as an independent taxable person which has 
provided to the applicant services which are in those circumstances subject to 
[turnover] tax and in respect of which U-GmbH is the taxable person. [German] 
national law did not provide for the formation of a VAT group for the year at 
issue; indeed, it has not made any such provision at all to date. Neither can a VAT 
group of this kind, which assumes liability for the persons closely bound to one 
another as joint and severally liable debtors, be incorporated into national law by 
way of an interpretation of Paragraph 2(2), point 2, of the UStG. 
9 The answer to the first question is of great significance not only to the case at 
issue but also to tax revenue in Germany, since, taken together, ‘Organträger’ (tax 
group parents) within the meaning of Paragraph 2(2), point 2, of the UStG make 
tax payments accounting for 10% of total revenue from turnover tax in Germany. 
10 An answer to the first question referred on the basis of option (b) would have 
correspondingly significant fiscal implications, given that, in the present case, no 
tax liability would attach either to the ‘Organträger’ (tax group parent) — 
which could challenge its liability to tax under Paragraph 2(2), point 2, of the 
UStG on the ground that that provision is contrary to EU law, and would then no 
longer have to pay tax at least on the turnover of the ‘Organgesellschaft’ (tax 
group subsidiary) — or to a VAT group or members of such a group — since 
the national legislature has not enacted any rules in this regard and the direct 
application of EU law, at the cost of a ‘fictitious’ and thus also, in the absence of 
any statutory foundation, non-existent entity, is not possible — or to an 
‘Organgesellschaft’ (tax group subsidiary) — which, notwithstanding the first 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-269/20 
 
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sentence of Paragraph 73 of the AO (since this provides only for liability as an 
‘Organgesellschaft’ (tax group subsidiary), can seek the application of 
Paragraph 2(2), point 2, of the UStG. 
11 The tax losses incurred in this way would arise under the application of Directive 
2006/112 too, since Article 11 thereof is essentially the same as the second 
subparagraph of Article 4(4) of Directive 77/388. 
The second question referred 
Definition of taxable person 
12 An activity carried out by a taxable person in his capacity as a taxable person 
constitutes an economic activity as described in Article 4(1) of Directive 77/388. 
Such an activity is characterised by the fact that the taxable person supplies or 
intends to supply goods or services for consideration within the meaning of 
Article 2(1) of Directive 77/388 (judgment of 12 May 2016, Gemeente Borsele 
and Staatssecretaris van Financiën, C-520/14, EU:C:2016:334, paragraph 21). 
Legal person as a taxable person 
13 A legal person can — just like a natural person — carry out activities other than 
economic ones. The Court of Justice describes these as ‘non-economic activities’ 
(judgment of 12 February 2009, Vereniging Noordelijke Land- en Tuinbouw 
Organisatie, C-515/07, EU:C:2009:88 [judgment in ‘VNLTO’], paragraph 35 et 
seq.). Even a legal person governed by public law — such as the applicant — can 
be a taxable person in one sphere of activity, while nonetheless at the same time 
carrying on activities which are incumbent on it in the exercise of public authority 
(of no relevance from the point of view of competition) (activities it carries on an 
official capacity) and do not therefore constitute economic activities. 
Article 6(2) Of Directive 77/388 and the judgment in VNLTO 
14 In the use of goods forming part of the assets of a business, as referred to in point 
(a), and supplies of services carried out free of charge, as referred to in point (b), 
Article 6(2) of Directive 77/388 contains two criteria for its application. However, 
only point (a), in presupposing a right to deduct the input tax paid on the goods 
used, on top of laying down the condition that the goods or services must be used 
for specific purposes, is contingent upon a further condition. 
15 Where a legal person acquires a mixture of goods both for the purposes of its 
economic activity as a taxable person and for its ‘non-economic activity’, 
including, for example, for non-material purposes, the Court of Justice does not 
allow that legal person, unlike a sole trader, to deduct input tax in full (see the 
judgment in VNLTO, paragraphs 37 to 39). The Court of Justice considers the 
criterion for the application of Article 6(2)(a) of Directive 77/388 not to be met in 
FINANZAMT T 
 
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those circumstances, on the ground that the use [of goods] for ‘non-economic 
activities’ does not constitute a use [of goods] for non-business purposes within 
the meaning of that provision. In the judgment in VNLTO, the Court of Justice 
held that Article 6(2)(a) and Article 17(2) of Directive 77/388 are not applicable 
to the use of goods and services allocated to the business for the purpose of 
transactions other than the taxable transactions of the taxable person, as the value 
added tax due in respect of the acquisition of those goods and services, and 
relating to such transactions, is not deductible. 
16 In the present case, the question arises in this regard as to whether that case-law of 
the Court of Justice affects only the extent of the input tax deduction or whether it 
is valid even in the case where Article 6(2)(b) of Directive 77/388 is applied 
independently and without regard to income tax deduction. The consequence of 
the latter scenario would be that a ‘non-economic’ activity could not be regarded 
as serving ‘non-business’ purposes in the context of the application of 
Article 6(2)(b) of Directive 77/388 either and that provision would not be 
applicable to supplies of services carried out free of charge for the purposes of a 
non-material activity or one carried on in an official capacity.  
Requirement of taxation in accordance with the VAT system 
17 Where, for example, a taxable person uses staff engaged to pursue his/her/its 
economic activity in order to provide services for other purposes, the question 
arises as to whether the ensuing taxation consequences may be different 
depending on whether the taxable person is a natural person or a legal person. 
18 If the taxable person is a natural person who runs a cleaning business, for 
example, and uses the staff from his business to provide cleaning services for 
purposes connected with his private lifestyle in his private home, this leads, in the 
view of the referring court, to a supply of services carried out free of charge by the 
taxable person for his own private use within the meaning of Article 6(2)(b) of 
Directive 77/388. 
19 If the taxable person is a legal person which also runs a cleaning business and, in 
so doing, uses the staff from its business to clean premises used for official 
purposes, as in the case at issue, the question is whether this situation too — like 
that in which a sole trader uses goods or services for private purposes — leads to 
the application of Article 6(2)(b) of Directive 77/388, since the taxable person 
may in those circumstances be said to be supplying services free of charge for 
non-business purposes. 
20 From the point of view of the VAT system, Article 6(2)(b) of Directive 77/388 
could be said to be applicable in both cases. On that basis, the use of goods or 
services for a ‘non-economic activity’, such as, potentially, within the official 
sphere of operation of a legal person governed by public law, would have to be 
regarded as use for non-business purposes within the meaning of Article 6(2)(b) of 
Directive 77/388. This, however, might be considered to be contrary to the 
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judgment in VNLTO, although, as has already been noted, that judgment was 
given in relation to the deduction of input tax, and the question therefore arises as 
to whether it is also relevant in the context where Article 6(2)(b) of Directive 
77/388 is applied independently and without reference to the deduction of input 
tax.