On 11 December 2025, the Court of Justice ruled in Česká síť (C-796/23) that a Member State cannot make one partner liable for VAT on services that the other partners supplied to their own end customers.
The case
Česká síť worked with the branch offices of three US companies that provided internet connections in the Czech Republic. The Czech tax authority treated them together as a civil law partnership, which has no legal personality of its own. Under the Czech VAT rules at the time, Česká síť was the partnership's designated partner and owed the VAT on the services of the whole partnership.
The ruling
VAT follows the person who independently carries out the economic activity. The test is who acts in their own name, on their own behalf and under their own responsibility, and who bears the economic risk. Close cooperation between businesses does not change that.
On the facts given, the branch offices appeared to be the taxable persons. Each supplied its own customers in its own name and recorded the income itself. If the Czech court confirms this, Article 193 of the VAT Directive prevents the VAT from being placed on Česká síť. It makes no difference that the branch offices departed from the civil law rules on representing the partnership.
The Court left one route open. If the split of sales between the companies were a purely artificial arrangement constituting an abuse, the national rules on VAT groups could allow them to be treated as a single taxable person.
What to check
- In a joint venture or other unincorporated cooperation, look at who deals with the customer, in whose name, and who carries the risk. A national label does not decide who owes the VAT.
- The Court stressed that identifying the taxable person must be predictable for third parties, so that they can exercise any right of deduction with legal certainty. Make clear to your customers who their supplier is.
mr. J. el Khalfioui LL.M.