VAT Alert (25/04/2013)
European Court of Justice clarifies VAT grouping rules
Following a first case, the European Court of Justice (hereafter referred to as the CJEU) ruled today in a series of court rulings that a non-taxable person (i.e. an entity without an economic activity of its own such as a passive holding company) is entitled to join a VAT group. This results from a series of infringement actions by the European Commission against EU Member States that allow such entities to enter in a VAT group. In a separate case however, the CJEU stated that national VAT legislation is entitled to limit VAT grouping to a certain industry such as the financial industry, as long as this is driven by the need to prevent tax evasion or avoidance.
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