VAT Grouping from a European Perspective

This book covers various aspects of the EU VAT grouping scheme and analyses the scope of the rule in light of current EU law and Member States’ implementations.

Winner of the 2014 Maurice Lauré Prize awarded by the International Fiscal Association (IFA), the 2014 Austrian Wolfgang Gassner Science Prize awarded by IFA Austria and the 2014 Austrian Award of Excellence awarded by the Austrian Ministry of Science, Research and Economy.

Why this book?

In theory, VAT is a neutral tax and should not become a burden for companies. On that account, the business decision to insource or outsource activities should be irrelevant for the VAT treatment. However, the current EU VAT regime is (partly) harmonized and does not generate neutrality for all companies involved, i.e. companies not able to (fully) deduct input taxes. Member States are granted an option for introducing a VAT grouping regime that allows legally independent persons to be treated as one single taxable person under certain conditions. The main consequence of VAT grouping is that it leads to out-of-scope intra-group transactions, enabling companies to outsource functions without running the risk of non-deductible VAT. The notion of EU VAT grouping stems from the German Organschaft regime, which was originally introduced to produce neutrality within the chain of companies.

This book provides an overview of VAT policy considerations for introducing VAT grouping and the history of the EU VAT grouping notion, and offers an in-depth analysis of the scope of the VAT grouping notion found in the VAT Directive. While elaborating on the scope of the VAT grouping concept, the fundamental freedoms relating to the territorial scope and State aid provisions with respect to the personal scope are scrutinized. The scope of VAT grouping is furthermore analysed in the light of the ECJ’s case law on VAT grouping, VAT in general and other case law relevant to the topic.

After a thorough analysis of the Member States’ domestic implementation of the VAT grouping regime, the book further covers the consequences of VAT groups in domestic and cross-border contexts and discusses the rights and obligations of a VAT group, ranging from the place of supply to the right to deduct input taxes. Lastly, the book contains a comparison of the EU VAT exemption for cost-sharing arrangements and VAT grouping and discusses their possible interaction.