The European Court of Justice issued a preliminary ruling on Jan. 22, 2026, stating that the Spanish VAT exemption for services rendered by cost‑sharing groups to members at cost is not valid. The ruling interprets Council Directive 2006/112/EC as precluding such an exemption, as the services were deemed outsourced and not linked to tax‑exempt activities. The decision applies to services such as cleaning for healthcare and educational buildings.

The UK Supreme Court confirmed that VAT incurred on adviser fees related to an exempt share sale is not recoverable, applying a strict two‑stage test that requires a direct and immediate link to the transaction. The ruling rejects the modified approach that allowed recovery based on intended use of proceeds and clarifies that VAT grouping does not alter the nature of a share sale. Businesses must conduct early VAT analysis for share disposals to account for irrecoverable adviser fees.

On 26 January 2026, the UK Supreme Court ruled that VAT incurred on adviser fees for an exempt share sale is not recoverable. The decision applies a strict two‑stage test, rejecting the modified approach that allowed recovery based on intended use of proceeds. The ruling closes the possibility of treating such costs as general overheads to fund taxable activities.