EUCJ was requested to explain whether budgetary entities performing economic activities delegated to them by a municipality can be considered as taxable persons for VAT purposes. These entities do not bear an economic risk associated with carrying out those activities since they do not own their own property, do not generate their own earnings and do not bear costs of those activities. Any earnings generated are assigned to a budget of a municipality and expenses are directly attributed to a budget of that municipality.

EUCJ explained that such an economic entity performed activities on behalf of a municipality, i.e., was not acting independently and, therefore, cannot be considered as taxable persons for VAT purposes.