Germany’s charitable service-company relief: an EU aid opinion

Cooperation does not remove the conditions

Section 57(3) of the Abgabenordnung allows a body to fulfil its charitable purpose directly through planned cooperation specified in its governing documents with another qualifying body. Cooperating activities are considered together when assessing a purpose business. This is not a general exemption for every supplier to a charity.^[2]

Section 5(1), No. 9, of the Körperschaftsteuergesetz and section 3, No. 6, of the Gewerbesteuergesetz provide the corporate and trade tax exemptions, subject to governing-document and actual-management requirements and economic-business exclusions. AO section 55 restricts distributions, use of funds and disposal of assets on dissolution. These constraints are materially different from an ordinary shareholder’s access to profits and residual assets.^[3][4][6]

VAT follows a separate route. Section 12(2), No. 8(a), of the Umsatzsteuergesetz provides a 7% rate for qualifying supplies, rather than a corporate-tax exemption. It excludes economic-business supplies and imposes further conditions for specified purpose businesses, including restrictions concerning additional revenue and direct competition or the body’s own fulfilment of charitable purposes. The general rate is 19%.^[5]

Different selectivity conclusions

C-477/25 concerns a company established to provide financial-management and accounting services to a charitable foundation. Rantos considers the restrictions on profit use and asset allocation sufficient to distinguish such bodies from ordinary companies for corporate and trade tax selectivity. His conclusion remains subject to national-court factual checks.^[1]

He reaches a different conclusion for reduced VAT: supplying an ordinary service to a charitable customer does not itself bring the supplier within the social-welfare categories permitted by Directive 2006/112/EC. He regards the distinction as selective and potentially State aid if the other conditions are met. Where relief constitutes aid, expanding its beneficiaries would, in his proposed interpretation of Article 108(3) TFEU and Regulation 2015/1589, require prior notification as new aid.^[1]

For service groups working with charities, the distinction matters when reviewing pricing and eligibility. This is an Advocate-General opinion—not a Court judgment, repeal, recovery order or automatic loss of relief. It introduces no new commencement date.^{[1][2][3][4][5]}