On 9 July 2026, the Court of Justice ruled in Schoger II (C-360/25) that a national VAT exemption can be tested as State aid.
The case
An Austrian bank, head of a VAT group, applied a national exemption for services between undertakings primarily active in banking, insurance or pension funds. The exemption was repealed with effect from 1 January 2025, but it applied in the period at issue. The Austrian court raised the State aid question itself, after doubts arose about cross-border services relating to cash machines.
The ruling
The exemption is not among those exhaustively listed in the VAT Directive, so it is imputable to Austria and not to the EU. The Court found the conditions of Article 107(1) TFEU met:
- State resources: the State gives up tax revenue. The Austrian legislature itself pointed to extra VAT revenue from the repeal.
- Selective advantage: the beneficiaries are favoured over suppliers that must charge VAT to the same customers. The lack of a right to deduct does not remove that advantage at this stage.
- Competition and trade: both are liable to be affected, even though operators from other Member States could also benefit.
Austria asked the Court to limit the judgment to the future. The Court refused, because Austria gave no figures showing serious difficulties. It added that tax periods which are definitively closed should not be reopened in national court proceedings, without prejudice to the powers of the Commission.
What to check
- Financial groups in Austria should review open periods in which they applied the exemption.
- In other Member States, look at any national exemption that has no clear basis in the VAT Directive. State aid is a route by which it can be challenged.
- Note that a court raised this of its own motion, although the taxable person relied on the exemption.
mr. J. el Khalfioui LL.M.