Brussels, 28/07/2016 (Agence Europe) - On Thursday 28 July, the Court of Justice of the EU found that services provided by lawyers for the poorest members of society under legal aid cannot be exonerated from VAT, when all services they provide can be subject to VAT.
In this case (C-543/14), several law societies, associations and individuals approached the Belgian Constitutional Court to have the 2014 law introducing VAT (at 21%) on legal services in Belgium repealed. They argue that the resulting increase in the costs for these services infringe the right to recourse and, in particular, the right to the assistance of a lawyer. This law also set the VAT rate on legal aid at 0%.
In its judgment, the Court did not stray from the opinion of Advocate General Eleanor Sharpston, which were presented in March (see EUROPE 11510). She found that services provided by lawyers could be subject to VAT, as this represented only a small fraction the costs of the legal proceedings. The right to effective recourse was therefore not infringed. The same applies, she said, to the principle of equality of arms, as legal subjects who are not taxpayers are not, after all, put in a situation of net disadvantage compared to legal subjects who are taxpayers.
Finally, the Court took the view that the services provided by lawyers were not generally of a social nature. Admittedly, they offer legal aid but this is carried out on a voluntary basis and therefore does not constitute one of the profession's objectives. Hence, it does not respond to the dual requirement of having activities of a social nature and of being engaged in works of assistance and social security in order to be able to claim the right to a VAT exoneration. (Original in French by Jan Kordys)