CJEU: Non-taxable persons can be part of a VAT group
Publication date 26 April 2013
On April 25, 2013, the Court of Justice of the European Union (CJEU) rendered judgment in the Commission vs. the Netherlands case (case no. C-65/11). In dispute was the Dutch policy which allows top holdings to be included in a VAT group. The European Commission considers this to be contrary to the VAT Directive. However, the CJEU ruled that non-taxable persons, such as top holdings, can be part of a VAT group.
The judgment is important for two reasons:
1. It does not appear that current Dutch policy on top holdings will have to be changed.
2. In some cases, the composition of the VAT group could be broader than was previously thought possible.
1. Judgment no reason to immediately withdraw or change Holding Resolution
The key issue dealt with in the judgment is the resolution of February 18, 1991, (no. VB91/347), commonly known as the Holding Resolution. The Resolution contains an approval for including top holdings in VAT groups. Top holdings are companies that do not offer services for payment, but whose role within the VAT group is one of steering and policy making. The Deputy Minister of Finance has never amended the Resolution in response to case law. Now that the CJEU has ruled that there are no grounds for excluding non-taxable persons from a VAT group, it is unlikely that the Deputy Minister of Finance will withdraw or amend the Holding Resolution on this point. However, we cannot rule out that he may consider there to be other grounds for amending the Holding Resolution.
2. Dutch interpretation of a VAT group possibly too narrow
It can further be inferred from this judgment that non-taxable persons can be intertwined with other companies within the group in such a way that they may already form part of an existing VAT group. Therefore, the judgment may not be limited to top holdings, but could have a wider impact.