The Resource The territorial scope of VAT grouping schemes in the financial sector

The territorial scope of VAT grouping schemes in the financial sector

Label
The territorial scope of VAT grouping schemes in the financial sector
Title
The territorial scope of VAT grouping schemes in the financial sector
Creator
Subject
Language
eng
Summary
There is an increasing interest on the part of the Member States in using the option of Value Added Tax (VAT) grouping provided in Article 11 of the VAT Directive, whose main effect is to allow related legal entities to make inter-company supplies of goods and services without charging VAT. The exact terms and effects of VAT grouping vary widely among Member States, threatening the internal market. Cross-border national schemes involve control issues as well as revenue sharing problems and opportunities for harmful tax competition and legal disputes. Therefore, they are opposed by the European Commission. However, based on the lack of guidance in EU law on how to apply Article 11 and apparent lack of consensus between the main institutional stakeholders, namely the Member States and the EU institutions, several national tax designs do not limit their effects to the national territory. Such design is particularly useful for sectors where transnational entities perform VAT exempt activities, such as financial institutions, who can gain from using such schemes to avoid embedded non-recoverable VAT. This article briefly describes the current legal and jurisprudential status quo on the territorial scope of VAT grouping and discusses the main arguments in favour of national VAT groups as well as the ones underpinning VAT groups with cross-border effects. The main conclusion following from this analysis is that an economically acceptable and practical solution to address issues raised by charging VAT on intra-group supplies in exempt or partially exempt sectors is still necessary, since the 'dissolution effect' proposed by the Commission has some theoretical flaws, and cost sharing groups, though helpful, face their own limitations. Moreover, cross-border VAT grouping will not be an attractive option in the EU until conflicts of jurisdiction and revenue sharing issues are addressed by the EU institutions and the Member States
Citation source
In: Intertax. - Alphen aan den Rijn. - Vol. 42 (2014),
http://library.link/vocab/creatorName
Soares, C. Dias
Geographic coverage
International
Language note
English
http://library.link/vocab/subjectName
  • VAT
  • VAT group
  • VAT Directive
Label
The territorial scope of VAT grouping schemes in the financial sector
Instantiates
Publication
Label
The territorial scope of VAT grouping schemes in the financial sector
Publication

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