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Non-taxable persons allowed in a VAT group – several decisions rendered by the CJEU

On 9 April 2013, the CJEU decided in the Commission vs. Ireland (C-85/11) case that non-taxable persons can be part of a VAT group on the basis that the VAT Directive determines that a fiscal unity can be formed by ‘persons’ and does not prescribe that each member of the fiscal unity must be an entrepreneur or taxable person for VAT purposes.

Subsequent to this decisions the CJEU has confirmed the above position in several similar cases rendered on 25 April 2013: Commission v. Denmark (C-95/11),Commission v. Finland (C-74/11),Commission v. Sweden (C-480/10),Commission v. United Kingdom (C-86/11),Commission v Netherlands ( C-65/11),and Commission v Czech Republic (C-109/11) case. The CJEU dismissed the cases as the Commission had failed to demonstrate that the EU VAT Directive had been infringed by allowing non VAT entrepreneurs to be part of a VAT group.

In the case Commission v. Sweden the CJEU also dismissed the arguments of the Commission as it had failed to demonstrate that the EU VAT Directive had been infringed by restricting the possibility of forming a VAT group to entrepreneurs in the financial and insurance sector to decrease the risk of abuse of the VAT group scheme.

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