VAT grouping harmonisation
The European Commission (EC) is calling for a more uniform approach to VAT grouping across member states. Article 11 of the VAT Directive contains the provisions for VAT groups. This Article gives member states the option to allow for VAT grouping in their domestic legislation. Currently fifteen member states have introduced VAT grouping.
The EC is aware that there are significant differences between the way VAT groups operate in different member states. A new EC communication identifies the key issues for joining a VAT group. The communication confirms that any person joining a VAT group must be a ‘taxable person’ in their own right. Therefore any entity which is not a ‘taxable person’ does not qualify to be a VAT group member.
The communication also includes some further details on who can form a VAT group, the rights and obligations of a VAT group, the right of deduction and the need for Member States to take anti-avoidance measures.