EC communication on VAT grouping : an attempt to harmonize or to restrict the use of group registration?

The VAT Directive provides the Member States of the European Union with an option to introduce VAT grouping into their national legislation. Group registration has become a source of tax competition between the Member States, which means that it has a potential impact on the functioning of the internal market and on the basic principles of the Community VAT system. The Commission, as the guardian and initiator of Community legislation, has published its views on a number of essential elements of VAT grouping. In this article, the authors summarize the Commission's analysis and specifically comment on the limitation of VAT grouping to taxable persons and the territory of individual Member States.