Cost Sharing Groups (CSG)

What can a CSG do for you?


CSGs have existed in European legislation at least since 2003 in the EU VAT Directive Article 132 (1) (f) which provides VAT exemption for cost sharing subject to a number of conditions. This Article was not present in UK VATA 1994 but was in fact mandatory as a result of the EU Directive.

UK legislation provides that the provision of services for a consideration is either standard rated, zero rated or exempt for VAT purposes.

However, from 17 July 2012 subject to the following conditions supplies of services are exempt if:-

  • The CSG is an independent group
  • The members make exempt or non-taxable supplies
  • The services are supplied at cost
  • The services are directly necessary to the members exempt or non-business activities, and
  • The cost sharing must not cause a distortion of competition

Who can set up a CSG?

A body whose activities are 85% exempt and/or non-business can set up a group with other similar bodies. This would be attractive to various sectors such as education, health and welfare, financial, social landlords, cultural bodies, charities and non-profit distributing bodies.

Once in a CSG costs incurred by the members of the group are shared between the members of the group at cost and free of VAT. This can be hugely advantageous when funding is taking a cut in the current economic climate. Members within the group can provide services to other members within the group at cost and free of VAT.


Once established the CSG can be used for the purchase of any service thus saving the profit element, the VAT on the cost of 20% and in addition to this are the savings on staff costs, overheads etc.

How can Elysian associates help?

In conjunction with a leading Barrister we have already successfully set up a number of CSGs which are now up and running. Sectors already using the groups in East Anglia are local authority, educational, research and charity sectors. Those thinking about it are cultural and sporting.

We would be more than happy to visit you and discuss the possibilities of setting up a CSG in your area.

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