Court of Justice rules that Austrian VAT exemption for financial-sector services constitutes State aid
The Court of Justice has delivered its judgment in Case C-360/25, Schoger II, concerning an Austrian VAT exemption for services provided between undertakings mainly active in the banking, insurance or pension fund sectors.
The request for a preliminary ruling was made by the Austrian Federal Finance Court. The referring court asked whether Article 107(1) TFEU is to be interpreted as meaning that a VAT exemption for services — which are not otherwise exempt — supplied between undertakings primarily carrying
out operations relating to the banking, insurance, or pension fund sectors constitutes State aid within the meaning of Article 107(1) TFEU.
The Court held that such an exemption, constitutes State aid within the meaning of Article 107(1) TFEU. The measure was imputable to the State as it went beyond what was provided by the European rules regarding VAT. Indeed, a tax exemption established by a Member State is imputable to the European Union, and not to that State, only if it merely reproduces a clear and precise obligation laid down in a directive, which was not the case here. The other conditions set by Article 107(1) TFEU were all met: the measure involved a loss of State resources through foregone tax revenue, conferred a selective advantage on certain financial-sector undertakings that could not be justified, and was liable to distort competition and affect trade between Member States.
The judgment is relevant for national tax measures and sector-specific exemptions, as it confirms that VAT exemptions going beyond the harmonised framework of the VAT Directive and conferring a selective advantage to certain enterprises may fall within the scope of EU State aid rules.
For further information, see the Court of Justice’s judgment.