The European Court of Justice (ECJ) issued a decision in the case of Les Jardins de Jouvence SCRL v. Belgian State on 21 January 2016.

An application was made in July 2014 by the Court of Appeal in Mons for a preliminary ruling from the ECJ. This case concerned a serviced residence in the Walloon region of Belgium. The service residence made available for profit individual dwellings designed for one or two persons with a fitted kitchen, sitting room, bedroom and fitted bathroom with a range of optional services supplied for payment. Those optional services such as bar restaurant, hairdressing and beauty salon, physiotherapy room and therapy activities, laundry, pharmacy and doctor’s surgery were not exclusively available to the occupants of the serviced residences but also for other users.

The question put to the ECJ was whether this was a body that was in essence devoted to social wellbeing that carried out “supplies of services and of goods closely linked to welfare and social security work”, for the purposes of Article 13 A (g) of the Sixth VAT Directive (now Article 132 (1) (g) of the EU VAT Directive 2006).

Also the ECJ was asked if the answer to that question would be different if the serviced residence in question received subsidies or any other form of advantage or funding from public authorities for the supply of the services.

Provision of EU VAT Directive

Article 132 of the EU VAT Directive 2006 sets out the exemptions from VAT within the territory of a country. Part 1 lists the exemptions for certain activities in the public interest. Member states are to exempt these activities under conditions they lay down for the purpose of ensuring the correct and straightforward application of the exemptions and of preventing any possible evasion, avoidance or abuse.

Article 132 1 (g) exempts 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 organizations recognized as charitable by the Member State concerned.

ECJ Ruling

The ECJ ruled that the VAT Directive must be interpreted as meaning that the services provided by a serviced residence (whose charitable nature must be assessed by the referring court), consisting of the provision of dwellings adapted for elderly persons may benefit from the exemption.

The other services provided to residents may also benefit from the exemption, provided that the services offered under national law are intended to achieve the support and care of elderly persons and correspond to the services which old people’s homes are also obliged to offer in accordance with national legislation. It is not relevant whether or not the operator of a serviced residence receives a subsidy or any other form of advantage or financial support from public authorities.