The Court of Justice of the European Union (CJEU) delivered its judgment in the case of Gemeinde A v Finanzamt C344/22 on 13 July 2023, which related to Gemeinde A’s right to deduct input VAT and the interpretation of Articles 2 and 13 of the VAT Directive. Gemeinde A is a state-recognised air spa town in Germany; its spa administration is managed as a government-operated business under municipal law, and for the purposes of corporation tax it qualifies as a commercial business. Gemeinde A collects a spa tax, which covers the costs of erecting and maintaining the facilities provided for spa and leisure purposes. Certain categories of person are subject to the spa tax, but it is not collected from day visitors or non-local persons or residents working or training in the area. For non-local persons the tax is set at a certain amount per day of stay, and for resident persons an annual flat rate applies irrespective of duration, frequency and season of their stay. There are also reporting requirements for accommodation providers and travel agents. The spa facilities are freely accessible to all.
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