On 12 March 2015 the European Court of Justice (ECJ) gave its preliminary ruling in the case of “go fair” Zeitarbeit OHG (C-594/13). The ECJ had been requested by the German Bundesfinanzhof to respond to questions in respect of the VAT exemption for welfare and social work.

The first question related to Article 132(1)(g) of Directive 2006/112/EC on VAT. Article 132 concerns exemptions for certain activities in the public interest. 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 bodies recognized by the member state concerned as being devoted to social wellbeing.

The ECJ was asked if a member state may exercise its discretion to recognize a body as devoted to social wellbeing in a way that it recognizes persons who provide services to social security funds and care funds but does not recognize State-examined care workers providing services directly to persons who need care.

Also in relation to Art 132(1)(g) the ECJ was asked if in a situation where State-examined care workers are recognized as devoted to social wellbeing, the recognition of a temporary work agency hiring out State-examined care workers to recognized care establishments follows from the recognition of the staff hired out.

The other question referred to the ECJ related to Article 134 (a) of the 2006 VAT Directive. This provides that certain goods or services including those in Article 132 (1) (g) are not granted the exemption where the supply is not essential to the transactions exempted.

The ECJ was asked if the supply of State-examined care workers, being a transaction closely linked to welfare and social security work, is essential to the provision of care services to the host establishment if that establishment cannot operate without staff.

The decision of the ECJ was issued on 12 March 2015. The ECJ held that Art 132(1)(g) of the VAT Directive must be interpreted to mean that neither State-examined care workers providing services directly to persons needing care nor a temporary work agency supplying those workers to establishments recognized as devoted to social wellbeing come within the scope of “bodies recognized as being devoted to social wellbeing” under that provision.