Cost sharing groups are associations of taxpayers who come together to purchase services from third parties. The VAT Directive exempts from VAT services that cost sharing groups can supply to their members under the following conditions: the members' activities should be exempted from VAT, the shared services should be directly necessary to the members' activities, the group should claim exact reimbursement of each member's share of the joint expenses and finally, such exemption should not cause distortions of competition. This rule does not limit the exemption to any sector. The German VAT legislation exempts only groups from the health and medical sector. Groups from other sectors have to pay VAT on shared services. By restricting the VAT exemptions to services in the medical and health care sector, the German VAT legislation conflicts with EU law.