Ireland's VAT group rules which allow a non-taxable person to be a member of a VAT group are not contrary to EU law in the opinion of the Advocate General. This opinion was issued on foot of infringement proceedings brought by the Commission against Ireland on the grounds that Irish VAT Group rules are not compatible with Articles 9 and 11 of Directive 2006/112/EC.

Under section 15 VATCA 2010, a non-taxable person may join a VAT group where at least one other member of the VAT group is a taxable person. The European Commission does not believe that this approach is compatible with EU legislation on the grounds that VAT grouping is aimed at simplifying VAT administration between taxable entities closely bound by financial, economic and organisational links. Consequently, in the Commission's view, non-taxable entities should not be included in a VAT group. Infringement proceedings were brought against Ireland as well as other Member States such as the UK and the Netherlands on this matter.

However, in the opinion of the Advocate General “it is not an anomaly that non-taxable persons can belong to a VAT group. This is so because any taxable person may be engaged in activities falling within the scope of VAT and activities falling outside of the scope of VAT. In this respect no distinction can be made between an ordinary taxable person and a VAT group.”

The Advocate General's opinion is published on the Court of Justice website.