Commentary

V2.213 States, regional and local government authorities and other bodies governed by public law

Part V2 Registration – deregistration

V2.213 States, regional and local government authorities and other bodies governed by public law

V2.213 States, regional and local government authorities and other bodies governed by public law

This paragraph examines the business status of activities conducted by 'states, regional and local government authorities and other bodies governed by public law'.

For an overview of VAT and business more broadly, see V2.201B.

'States, regional and local government authorities and other bodies governed by public law' is the terminology used in Directive 2006/112/EC, arts 13(1), (2)1. For a detailed discussion of this article, see Cambridge2 which was followed in Wakefield College3.

States, regional and local government authorities etc—European legislation

A state, a regional or local government authority, or other body governed by public law is not, in respect of activities in which it engages as such, regarded as a taxable person (Directive 2006/112/EC, art 13(1)4). However, Directive 2006/112/EC, art 13(1) effectively sets two conditions which must be fulfilled cumulatively: the activities must be carried out by a body governed by public law; and they must be carried out by that body acting as a public authority (see Saudaçor5, applied in Nagyszénás Településszolgáltatási Nonprofit Kft6).

If the two conditions are not met, the rule of treatment as a non-taxable person does not apply.

Where non-taxable treatment does apply, however, the body could, enjoy a commercial advantage (ie there may be a significant distortion of competition as a result of the body not being required to charge VAT) where it performs activities which are similar to those provided, or which may be provided, by private organisations. Consequently, it is to be

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