Brussels, 2 July 2009
VAT: The European Commission calls for a harmonised application of the VAT grouping rules
The European Commission has today adopted a Communication setting out its position on VAT grouping schemes. The EU VAT legislation gives Member States the option, for the purpose of administrative simplification, to regard as one single taxable person those who, while legally independent, are closely bound to one another by financial, economic and organisational links. The Communication includes guidelines which aim at ensuring a correct, coherent and uniform application of the VAT grouping option.
Lászl ó Kovács, Commissioner responsible for Taxation and Customs Union said: "The practice has shown that the VAT grouping scheme although being a simplification measure for operators, could lead to tax evasion. For that reason the Commission proposes clear guidelines on how to apply in practice this scheme".
The Communication adopted today sets out the Commission's view on how the provisions of Article 11 of the VAT Directive 1 should be translated into practical arrangements whilst respecting the basic principles of the Community VAT system and ensuring that the effects of using the option scheme remain restricted to the Member State applying it. The Communication includes the following aspects:
The VAT grouping option has been available to Member States since the 1970s. The Commission has taken note of an increased interest from Member States to make use of this option. There are now 16 Member States which have introduced VAT grouping schemes into their national legislation. It has become evident that there are wide divergences between the VAT grouping schemes implemented by Member States.
The Communication can be found at this web link:
Council Directive 2006/112/EC