- Council Directive (EC) 2006/112 on the common system of value added tax [2006].
- On the legal history of VAT groups under EU law see Joep Swinkels, ‘The Phenomenon of VAT Groups under EU Law and their VAT-Saving Aspects' [2010] International VAT Monitor 36.
- Advisory committee on value added tax.
- See Kenneth Vyncke, ‘VAT Grouping in the European Union: Purposes, Possibilities and Limitations’ [2007] International VAT Monitor 250 ff.
- Austria, Belgium, the Czech Republic, Cyprus, Denmark, Estonia, Finland, Germany, Hungary, Ireland, the Netherlands, Romania, Spain, Sweden, the United Kingdom, Slovakia.
- Communication from the Commission to the Council and the European Parliament on the VAT group option provided for in Article 11 of Council Directive (EC) 2006/112 on the common system of value added tax, COM (2009) 325 final. For an analysis see Ivan Massin and Kennteh Vyncke, ‘EC Communication on VAT Grouping: An Attempt to Harmonize or to Restrict the Use of Group Registration?’ [2009] International VAT Monitor 454; Tina Ehrke-Rabel, ‘Mitteilung der Kommission zur Mehrwertsteuergruppe’ in Joachim Englisch and Hans Nieskens (eds), Umsatzsteuer-Kongress-Bericht 2010 (Verlag Dr Otto Schmidt, 2011) 160; Ad van Doesum and Gert-Jan van Norden, ‘T(w)o become One: The Communication from the Commission on VAT Grouping' [2009] British Tax Review 657.
- For more detail see Kenneth Vyncke, ‘EU VAT Grouping from a Comparative Tax Law Perspective’ (2009) 18 EC Tax Review 299.
- COM(2009) 325 final, 5.
- Case C-162/07 Ampliscientifica [2008] ECR I-4019, para 19.
- COM(2009) 325 final, 6. See Massin and Vyncke (n 6) 459; van Doesum and van Norden (n 6) 661.
- On 28 February 2011 the European Commission brought an action against Denmark before the ECJ (Case C-95/11). On 23 September 2011 Ireland, the Czech Republic, Finland and Great Britain were granted leave to intervene in that case in support of the form of order sought by Denmark. On 3 March 2011 the same action against the Czech Republic was brought before the ECJ (Case C-109/11). Ireland, Finland, Great Britain and Denmark were granted leave to intervene in that case in support of the form of order sought by the Czech Republic (order of the president of the Court of 14 September 2011). On 24 February 2011 the same action against Ireland was brought before the ECJ (Case C-85/11). Denmark, the Czech Republic and Finland have been granted leave to intervene in that case in support of the form of order sought by Ireland (order of the President of the Court of 4 July 2011).
- Action brought against Sweden on 5 October 2010, C-480/10.
- Action brought against Finland on 21 February 2011, C-74/11.
- COM(2009) 325 final, 7.
- For the different implementation and interpretation of the territorial scope of the VAT grouping in respect of subsidiaries see Vyncke (n 7) 302.
- COM(2009) 325 final, 9.
- Consequently, in the Ampliscientifica case (n 9) the ECJ held that treatment as one single taxable person precludes persons belonging to a VAT group from submitting individual separate VAT returns.
- COM(2009) 325, 10.
- COM(2009) 325, 11 ff. The fact that the calculation of the deductible proportion of VAT raises multiple questions is shown by the pending preliminary ruling in Case C-388/11 Société le Crédit Lyonnais v Ministre du budget, OJ (EU) 2011/C298/26, C298/13.
- Although the OECD Convention is irrelevant for VAT purposes since it concerns direct taxation, the sharing of costs for income tax purposes indicates the exchange of services between a head office and its branch (fixed establishment).
- COM(2009) 325, 7.
- Case C-210/04 FCE Bank [2006] ECR I-2825, para 41.
- See Ad van Doesum, Herman van Kesteren and Gert-Jan van Norden, ‘The Internal Market and VAT: Intragroup Transactions of Branches, Subsidiaries and VAT Groups’ (2007) 16 EC Tax Review 34, 37.
- COM(2009) 325 final, 8.
- See also van Doesum and van Norden (n 6).
- Ampliscientifica (n 9) para 19. See also Oskar Henkow, Financial Activities in European VAT (Wolter Kluwer, 2008) 190.
- See also Christian Amand, ‘Cross-Border Entities and EU-VAT: A Contradictory Concept?’ [2010] International VAT Monitor 20, 21, 22; Wolfram Reiß, ‘Begrenzung der Organschaftswirkung auf das Inland’ in Englisch and Nieskens (n 6) 195, 209.
- In this sense see Massin and Vyncke (n 6) 458.
- The difference in treatment between a third party's intra-Community supply and an intra-Community supply between a head office and its branch is narrow in connection with goods and significant in connection with services. This has to be looked at later.
- See Reiß (n 27) 212.
- van Doesum, van Kesteren and van Norden (n 23) 37 ff; Vyncke (n 4) 255 ff; Vyncke (n 7) 302; Reiß (n 27) 22 ff.
- See COM(2009) 325 final, 11; see also Vyncke (n 4) 251 ff; Swinkels (n 2) 39 ff; Ruud Zuidgeest, ‘Cross-Border VAT Grouping’ [2010] International VAT Monitor 25, 29.
- Case C-97/09 Schmelz [2010] ECR I-0000, para 50; Case C-114/96 Kieffer and Thill [1997] ECR I-3629, para 27; Case C-15/83 Denkavit Nederland v Hoofdproduktschap voor Akkerbouwprodukten [1984] ECR 2171, para 15; Case C-51/93 Meyhui v Schott Zwiesel Glaswerke [1994] ECR I-3879, para 11.
- Case C-112/91 Werner [1993] ECR I-429.
- Case C-446/04 Test Claimants in the FII Group Litigation [2006] ECR I-11753, para 53.
- Cases C-436/08 and C-437/08 Haribo Lakritzen Hans Riegel Betriebs GmbH, Österreichische Salinen AG [2011] ECR I-0000, para 90.
- See Reiß (n 27) 216.
- See Vyncke (n 4) 253; Reiß (n 27) 217.
- According to Art 21 of the VAT Directive the cross-border supply of goods within one taxable person shall be treated as an intra-Community acquisition of goods for consideration in the Member State of destination, although the transfer of goods takes place within one single taxable person.
- See Wolfram Birkenfeld, ‘Gedanken zur grenzüberschreitenden Organschaft’ [2010] Umsatzsteuer-Rundschau 198.
- Case C-285/10 Campsa [2011] ECR I-0000. The fact that the price paid for an economic transaction is higher or lower than the cost price, and therefore higher or lower than the open market value, is irrelevant as regards the classification of a transaction as a transaction (Case C-285/10 Campsa [2011] ECR I-0000, para 26; Case C-412/03 Hotel Scandic Gasaback [2005] ECR I-743, para 24).
- However, it must be noted that the consideration can be below open market value if a Member State has not implemented Art 80 of the VAT Directive (Campsa (n 41)). As a consequence, the advantage of a VAT grouping depends on whether the Member State of establishment of the acquiring company has implemented Art 80 or not. In the affirmative the grouping produces a lower tax burden than the non-existence of a group. In the negative the advantage of the grouping could remain a solely administrative advantage, because the consideration for intra-Community supply could be below open market value and could be equal to (or even below) the purchase price.
- This difference in treatment unlawfully limits non-resident companies' freedom to choose the form of secondary establishment by means of a subsidiary or a fixed establishment (see Vyncke (n 4) 256).
- According to Art 17 of the VAT Directive the transfer by a taxable person of goods forming part of his business assets to another Member State shall be treated as a supply of goods for consideration.
- Services supplied to a taxable person acting as such shall—according to Art 44 of the VAT Directive—be taxed in the State where that person has established his business.
- Under the general rules in respect of the place of supply of services in B2B situations.
- For a more detailed reference to the ECJ's case law in respect of freedom of establishment in direct tax situations and their consequences for VAT groups see Zuidgeest (n 32) 28.
- According to Art 44 of the VAT Directive, supplies of services to a taxable person acting as such shall be the place where that person established his business.
- See Andreas Fellner, ‘Die umsatzsteuerrechtliche Beurteilung der Unternehmereigenschaft des Leistenden in B2B-Konstellationen’ [2011] Österreichische Steuerzeitung 83.
- Case C-451/05 ELISA [2007] ECR I-8251, para 79.
- COM(2009) 325 final, 7.
- Case C-446/03 Marks & Spencer [2005] ECR I-10837, para 46; Case C-231/05 Oy AA [2007] I-6373, para 55; Case C-414/06 Lidl Belgium [2008] ECR I-3601, para 32; Case C-337/08 X Holding BV [2010] ECR I-1215, para 28.
- See also Massin and Vyncke (n 6) 461.
- In this sense see Reiß (n 27) 219 ff.
- Case C-318/07 Persche [2009] ECR I-359, para 52; Schmelz (n 33) para 57.
- According to Art 168 of the VAT Directive a taxable person is entitled to deduct input VAT insofar as the goods and services are used for the purpose of taxable transactions. As an intra-group supply of services would not constitute a taxable transaction, Art 168 would not apply.
- C-97/09 Schmelz [2010] ECR I-0000.
- Zuidgeest (n 32) 29.
World Journal of VAT/GST Law
Volume 1, 2012 - Issue 1