The situation
A group of practitioners planning a joint cost-sharing entity
Four GPs and two physiotherapists in Maastricht want to set up a joint entity that employs the reception staff, leases the building and buys the equipment, then charges each member its share. Their accountant asked you whether the entity must charge VAT on those charges. Two of them also run a sports-massage sideline, and a sister practice in Liège is considering the same set-up.
The exemption exists for exactly this. The hours go on the conditions: whether every member’s activity qualifies, how the sideline affects the group, whether the cost recovery is exact and whether the group competes with outside suppliers. Each condition has its own decisions, and the advice has to work in both countries.
What the research has to settle
The rules behind the answer
- The conditions in the VAT Directive
- The exemption covers services an independent group supplies to its members where the members’ activities are exempt or outside VAT, the services are directly necessary for those activities, the group claims only exact reimbursement of each member’s share of joint costs, and the exemption is not likely to distort competition.
- Only public-interest activities qualify
- In 2017 the Court of Justice held in Aviva (C-605/15) and DNB Banka (C-326/15) that the exemption is limited to groups whose members carry on activities in the public interest, such as medical care. Groups of insurers or banks cannot use it.
- Members with a taxable sideline
- Services the group provides for a member’s taxable activity are not covered. National rules and practice set how a group can serve members who also make taxable supplies, so the sports-massage work needs its own answer.
- Exact reimbursement means no margin
- The group recharges its costs without profit and in line with each member’s actual share. A mark-up, or a charge that does not follow the actual costs, puts the exemption at risk.
How it runs in azta
From the question to the document
The question, as you would type it
Four GPs and two physiotherapists in Maastricht form a foundation that employs staff and leases premises, charging members their exact share of costs. Two members also do taxable sports massage. Does the cost-sharing exemption apply in the Netherlands, and what changes for a similar group in Liège?
You start with
A group of practitioners planning a joint cost-sharing entity
- 01
Describe the group and its members
Set out each member’s activity, the shared costs and how they will be charged. azta searches the VAT Directive and the Dutch and Belgian VAT legislation.
Cited research· Free - 02
Find the decisions on each condition
Ask for the Court of Justice and Dutch decisions on public-interest activity, members with taxable work and distortion of competition. Each holding links to the full text.
Case-law search - 03
Draft the advice note
Ask for a note that walks through each condition for this group, with the open points for the client. Edit it in Canvas.
Canvas · Ask azta· Pro - 04
Send it as Word
Export to Word, add your sign-off and send it to the practice and its accountant.
Word export· Pro You send
An advice note on the cost-sharing exemption and the conditions to keep
What you get
An advice note on the cost-sharing exemption and the conditions to keep
Advice note · draft
VAT on the shared-practice charges: the cost-sharing exemption
Our view. The charges from the joint entity to its members can fall within the cost-sharing exemption, because the members’ medical and paramedical services are exempt activities in the public interest. The entity should not charge VAT on charges for those activities, provided the conditions below are met throughout.
Conditions to keep. Each charge must reimburse exactly the member’s share of the actual costs, with no margin, and the services must be directly necessary for the members’ exempt work. We recommend a written cost-allocation key, reviewed each year.
The sports-massage work. Services the entity provides for the taxable sports-massage activity are not covered. We set out two ways to handle this and the records each requires. For the Liège practice, the Belgian rules will need a separate note.
Outcomes on your numbers
What azta is worth on this task
Pro pays for itself after
11 minutes a month
At €150 an hour, that is all the time Pro (€27 a month) has to take off your desk to cover its price.
Example figures. Replace them with your own.
- Hours back a year
- 32
- Capacity at your rate
- €4,860
- More cost-sharing advice notes a quarter
- 1.5
- Return on Pro
- 15×
- Research
- Drafting
- Your review
A scenario you set, not a promise. The hours that come back go to another client, or deeper into this one.
Want these numbers on your team’s real workload?
Book a demoSources azta searches here
- EUR-Lex · Curia
- wetten.overheid.nl
- Rechtspraak.nl
- Belastingdienst
- Justel
What stays with you
- The facts of each member’s activity and how costs are allocated.
- The structure you recommend and the advice you sign.
- Any ruling request to the tax authority.
Frequently asked questions
- Is sports massage an exempt medical service?
- That depends on its purpose and on who provides it. Put the facts in the question and azta researches the exemption for paramedical care and how the courts have treated similar services.
- Does azta hold Belastingdienst material?
- Yes. It holds published Belastingdienst material alongside Dutch legislation and case law. The source register lists each collection.
- Can I read the Court of Justice judgments myself?
- Yes. Each decision in the answer links to the full text, so you can read the holding before relying on it.
