VAT grouping, FCE Bank and force of attraction - the internal market is leaking

In this article, the author demonstrates that three features of the current VAT system, i.e. VAT grouping, non-taxation of services between a company's main office and its branches abroad (under FCE Bank), and the principle of "force of attraction", in combination with the lack of harmonization of the rules on deduction of input tax, have seriously damaged the neutrality of the VAT system and have created distortions of competition, which are contrary to the objectives of the European Treaties.