{"id":3928,"date":"2025-12-05T15:44:34","date_gmt":"2025-12-05T14:44:34","guid":{"rendered":"https:\/\/pkf.hu\/?p=3928"},"modified":"2025-12-05T15:44:34","modified_gmt":"2025-12-05T14:44:34","slug":"cjeu-zlakov-vat-court-awarded-legal-aid-fees","status":"publish","type":"post","link":"https:\/\/pkf.hu\/en\/2025\/12\/05\/cjeu-zlakov-vat-court-awarded-legal-aid-fees\/","title":{"rendered":"CJEU judgment: The VAT treatment of attorneys\u2019 fees awarded in cases of free legal aid"},"content":{"rendered":"<p style=\"font-weight: 400;\"><strong>C 744\/23. \u2013 Zlakov<\/strong><\/p>\n<p style=\"font-weight: 400;\"><em>A consideration subject to VAT also arises where a court awards a fee to a legal aid provider who has acted free of charge in the proceedings, provided that the party represented is successful.<\/em><\/p>\n<p style=\"font-weight: 400;\">In the case at hand, a Bulgarian law firm provided legal assistance free of charge to a client who was in litigation with a lending bank over a credit agreement. The client won the case, and the court \u2013 as part of the recoverable legal costs \u2013 awarded an attorney\u2019s fee, the amount of which was calculated in accordance with the applicable statutory provisions. The bank treated the fee on a gross basis, while the lawyer treated it net of VAT, which gave rise to a further dispute. The national court referred questions to the CJEU for a preliminary ruling.<\/p>\n<p style=\"font-weight: 400;\">According to the CJEU, an attorney\u2019s fee awarded retrospectively by a court constitutes consideration for VAT purposes even where the lawyer originally did not request remuneration for the legal service. A lawyer remains a taxable person for VAT purposes even if they occasionally provide legal assistance free of charge.<\/p>\n<p style=\"font-weight: 400;\">As regards a court-awarded attorney\u2019s fee, the characteristics of \u201cconsideration\u201d as established in the CJEU\u2019s case-law are fulfilled. First, the fee is paid in return for a service and is directly linked to that service. It is irrelevant that the payment is made not by the lawyer\u2019s client but by a third party \u2013 namely, the unsuccessful party in the proceedings. Second, although in Case C-432\/15, Ba\u0161tov\u00e1, the Court held that the consideration must not be uncertain, no such uncertainty arises here. Under the Bulgarian rules of civil procedure, the legal representative is entitled to an ex post fee where the represented party succeeds in the proceedings, and the amount of that fee is determined by law. The consideration is therefore subject to clearly defined and objective conditions, even though the lawyer assumes a certain risk by providing legal assistance free of charge.<\/p>\n<p style=\"font-weight: 400;\"><a href=\"https:\/\/curia.europa.eu\/juris\/document\/document.jsf?text=&amp;docid=305416&amp;pageIndex=0&amp;doclang=EN&amp;mode=lst&amp;dir=&amp;occ=first&amp;part=1&amp;cid=8642679\" data-outlook-id=\"8aa8e5fb-f1e3-4979-bc85-af6b53d7984f\">Full English text of the judgement<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>C 744\/23. \u2013 Zlakov A consideration subject to VAT also [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":3912,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[685],"tags":[802,841,688,840,800,907,693],"class_list":["post-3928","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ecj-judgments","tag-cjeu","tag-cjeu-judgements","tag-ecj-en-2","tag-ecj-judgement","tag-ecj-judgements","tag-legal-aid-fee","tag-vat-en-2"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - 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