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Ireland VAT group case dismissed by ECJ

  • Apr 15, 2013 | Richard Asquith

Ireland VAT group case dismissed by ECJ

The European Court of Justice has ruled on 9 April that non-taxable entities may be included within VAT Groups in an Irish VAT appeal.

The Court found that the terms of the current EU VAT Directive allows for the inclusion of closely-bound economic persons to join the same VAT group if established in the same country.  However, it does not preclude ‘non-taxable’ economic persons.  It highlighted the exact wording of the EU VAT Directive, and its predecessor, the 6th VAT Directive.  The ECJ rejected the European Commission’s view that interpretation should be the other way around.

Ireland had been permitting the inclusion of non-active holding companies in VAT groups, which was enabling the set-off output VAT from other group subsidiaries against the input VAT of the holding companies.  Many other countries permit this practice, including: the UK; Czech Republic; Finland; and Denmark.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.