Luxembourg, 24/06/2002 (Agence Europe) - Germany, which has hitherto been exempted from VAT on research activities carried out for consideration by public sector higher education establishments, has been condemned by the European Commission. Although such research "may be regarded as of great assistance to university education", it is not indispensable for the teaching of students, states the Fifth Chamber of the Court presided by Austrian Judge Peter Jann.
To exempt research contracts from the payment of VAT (which would have been 16%), Germany used a provision of the VAT Directive, the so-called "Sixth Directive" in favour of university education.
Germany was too wide in its interpretation saying that research activities carried out for consideration by State universities constitute services which are "closely related" to university education.