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ARTICLE · 19 APRIL 2021

ECJ Paves The Way For Broader Application Of VAT-Group

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The ‘M-GmbH' ruling of the European Court of Justice (‘ECJ'), issued on 15 April 2021, paves the way for a broader application of the VAT group than most EU countries currently apply.

NetherlandsTax
Gino Sparidis
Gino Sparidis
Bart Heijnen
Bart Heijnen
Bram Middelburg
Bram Middelburg
Bert Gevers
Bert Gevers
Olivier Coulon
Olivier Coulon

The 'M-GmbH' ruling of the European Court of Justice ('ECJ'), issued on 15 April 2021, paves the way for a broader application of the VAT group than most EU countries currently apply. In line with previous rulings, the ECJ considers that the VAT group is not limited to VAT taxable persons or legal persons only. The ECJ rules that the links required to becoming (part of) a VAT group are EU definitions that should be interpreted by EU countries in the same way.

ECJ ruling

M-GmbH held the majority of the participation rights in a limited liability partnership. M-GmbH and the partnership could not form a VAT group because Germany only allows legal persons to form a VAT group. The partnership did not qualify as such. In its judgement, the ECJ ruled that Germany is not allowed to maintain this rule and that non-legal persons can also be part of a VAT group.

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