CJEU – Recent Developments in Value Added Tax 2016

S. 157VAT Grouping – A Comment

Caroline Heber

1. S. 158Deeper Harmonization of Art. 11(1) of the VAT Directive may not solve all Problems associated with VAT Grouping

It has been stated that there is an urgent need for greater harmonization of the VAT grouping regimes of the EU Member States. Without any further steps towards a harmonized VAT grouping regime, it is supposedly impossible to solve all existing problems associated with the various VAT grouping regimes.

Art. 11(1) of the VAT Directive provides only some guidance on what a VAT grouping regime within a Member State should look like. The provision sets minimum requirements such as the need for a financial, economic or organizational link between the members of a group. However, the VAT Directive leaves it up to the Member States to decide when two or more persons are financially, economically or organizationally linked and thus gives the Member States wide discretion with respect to the actual design and scope of the regime they employ. This discretion allows the implementation of different VAT grouping regimes within the European Union. One Member State may provide for a very strict regime allowing the formation of a VAT group only wher...