Nicholas Gardner, Senior Associate and Chartered Tax Adviser, Ashurst, comments
The issue
On 24 June 2010 the European Commission commenced infringement proceedings against the UK and certain other countries alleging that their VAT grouping rules do not comply with EU legislation. The specific issue identified with the UK rules (and those in the Netherlands Ireland Finland Denmark and the Czech Republic) is that they allow the inclusion of non-taxable persons in VAT groups.
The purpose of VAT grouping
The Commission’s view is that VAT groups have been designed ‘for the purposes of administrative simplification or combating abusive practices’. Where VAT groups include non-taxable persons the Commission considers this to circumvent the usual criteria for those persons to be treated as taxable persons. In a sense VAT grouping is always distortive since exempt and partially exempt traders can join fully taxable traders in a group.
Why...
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Home >Articles > VAT groups: infringement proceedings
VAT groups: infringement proceedings
Nicholas Gardner, Senior Associate and Chartered Tax Adviser, Ashurst, comments
The issue
On 24 June 2010 the European Commission commenced infringement proceedings against the UK and certain other countries alleging that their VAT grouping rules do not comply with EU legislation. The specific issue identified with the UK rules (and those in the Netherlands Ireland Finland Denmark and the Czech Republic) is that they allow the inclusion of non-taxable persons in VAT groups.
The purpose of VAT grouping
The Commission’s view is that VAT groups have been designed ‘for the purposes of administrative simplification or combating abusive practices’. Where VAT groups include non-taxable persons the Commission considers this to circumvent the usual criteria for those persons to be treated as taxable persons. In a sense VAT grouping is always distortive since exempt and partially exempt traders can join fully taxable traders in a group.
Why...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
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