The European Union Commission announced infringement proceedings last week against Ireland and the United Kingdom, along with Netherlands, Spain, Finland, Sweden, the Czech Republic and Denmark. This concerns the inclusion of non-taxable persons into VAT group arrangements. The countries concerned have been formally requested to amend their domestic legislation.

As the Commission has it, Article 11 of the VAT Directive gives Member States the option to regard as one single taxable person those who, while legally independent, are closely bound to one another by financial, economic and organisational links. Seven of the eight countries mentioned (the Swedish position is slightly different) permit non-taxable persons to join a VAT group. The Commission maintains that “this is not in line with the proper application of Article 11”.

More details are available at
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/1768&format=HTML&aged=0&language=en&guiLanguage=en.